In the graphical model of Weevokil banana production (Figure 10.1), the marginal private cost (MPC) is depicted as a straight, upward-sloping line. The graph's horizontal axis represents the quantity of bananas (Q) in tons per year, ranging from 0 to 100,000, while the vertical axis shows costs in dollars, ranging from 0 to 900. The MPC line specifically originates at a cost of \$200 for zero output (0, 200) and rises to \$400 at an output of 80,000 tons (80,000, 400).

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Figure 10.1 is a diagram that illustrates the marginal costs associated with growing bananas using the Weevokil pesticide. This graphical representation is fundamental for determining the plantations' profit-maximizing output choice, as it shows how the marginal private cost varies with the quantity of bananas produced.

Figure 10.1: The Plantations' Choice of Banana Output

To cite the ebook, use The CORE Econ Team 2023 The Economy 2.0: Microeconomics Open access e-text https://core-econ.org/the-economy/.

To cite a unit, use The CORE Econ Team 2023 The Economy 2.0: Microeconomics Open access e-text https://core-econ.org/the-economy/ Unit [unit number] (url).

CORE Econ - The Economy 2.0: Microeconomics

Graphical Representation of the Marginal Private Cost in the Weevokil Model (Figure 10.1)

In the Weevokil banana production model, the marginal social cost (MSC) is greater than the marginal private cost (MPC). This discrepancy arises because the production process generates a negative externality—pollution from the Weevokil pesticide—which imposes a marginal external cost (MEC) on local fishermen. The MSC is inclusive of this external cost, whereas the MPC is not.

Higher Social Cost of Banana Production due to Negative Externality

The key difference between Marginal Private Cost (MPC) and Marginal Social Cost (MSC) is their scope. MPC is limited to the direct costs a producer incurs for an additional unit of a good. In contrast, MSC is a broader measure that includes both the producer's private costs (MPC) and any external costs imposed on third parties. For example, in the case of Weevokil banana production, the MPC for growers includes the cost of the pesticide. The MSC, however, also incorporates the external costs borne by fishermen whose waters are contaminated by the pesticide, making the MSC higher than the MPC.

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