A factory is situated next to a dormitory for nurses who work night shifts. The factory produces 120 units of humanoid robots a day. The production process is rather noisy, and the nurses often complain that their sleep is disturbed. The following graph depicts the MPC and MSC of the robot factory production. The robot market is competitive and the market price is $340. Based on this information, which one of the following statements is correct?
Image failed to load: graph

Question

A factory is situated next to a dormitory for nurses who work night shifts. The factory produces 120 units of humanoid robots a day. The production process is rather noisy, and the nurses often complain that their sleep is disturbed. The following graph depicts the MPC and MSC of the robot factory production. The robot market is competitive and the market price is $340. Based on this information, which one of the following statements is correct?

Image failed to load: graph

Answer

At Q = 80, both the factory and the nurses would benefit from the factory paying a fee less than 80 to the nurses to increase output.

Answer

The efficient level of output is the factory’s profit-maximising quantity, which is 120.

Answer

The efficient level of output is 0, where there is zero marginal external cost to the nurses.

Answer

At Q = 120, both the factory and the nurses would benefit from the nurses paying a fee less than 120 to the factory to reduce output.

Crowdly

A factory is situated next to a dormitory for nurses who work night shifts. The ...

Want instant access to all verified answers on learning.monash.edu?