The marginal private cost of a chemical is 100 per ton and its ...

[Jipu 123]

The marginal private cost of a chemical is 100 per ton and its marginal external cost is 20 per ton. What is the marginal social cost of the chemical?
 
  What will be an ideal response?

Question 2

Assume that the cost of producing a hardback book is roughly equivalent to producing a paperback book. Explain how and why then do publishing companies charge higher prices for the hardback book and a much lower price for the paperback book.
 
  What will be an ideal response?

[carolinefletcherr]

Answer to Question 1

Marginal social cost equals marginal private cost plus marginal external cost. So the marginal social cost of the chemical is 100 + 20 = 120 per ton.

Answer to Question 2

The hardbound book version typically comes out before the paper bound version is made available. Consumers who have a higher ability and willingness to pay and an aversion to waiting will pay a higher amount of the hardbound version. Those who have a lower ability to pay and a willingness to wait will delay purchase of the book until the paperback version comes out.

[Jipu 123]

Excellent

[recede]

TYSM