Answer to Question #146403 in Macroeconomics for Luvhengo

Question

4.Draw a graph that represent the production activity of a coal mine in Mpumalanga, and where the air pollution analysed is in the form of coal dust. Use hypothetical figures to explain your graph.10

Answer 1

The production activity of a coal mine in Mpumalanga can be shown as a point of marginal private cost (MPC) and marginal social benefit (MSB) curves intersection. The optimal production will be lower at higher price in point, where MSB = MSC (marginal social cost).