Suppose that a firm's marginal production costs are given by MC = 10 + 4Q. The firm's production process generates a toxic waste, which imposes an increasingly large cost on the residents of the town where it operates: the marginal external cost (i. e. marginal damage inflicted on the residents) associated with the Qth unit of production is given by 2Q. Hint: The social marginal cost takes into account the private cost of the firm as well the marginal damage to the society of the firm's production activities.
(a) What is the marginal private cost associated with the 10th unit produced?
(b) What is the total marginal cost to society associated with producing the 10th unit (the marginal social cost of the 10th unit) ?
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