Refer to the figure below. From this graph, you can infer that paper production:

A)generates no externalities at quantities less than 300 tons per day.
B)generates an external cost of $50 per ton per year.
C)generates an external cost of $150 per ton per year.
D)should be prohibited.

Question

Refer to the figure below. From this graph, you can infer that paper production:  
  
A)generates no externalities at quantities less than 300 tons per day. 
B)generates an external cost of $50 per ton per year. 
C)generates an external cost of $150 per ton per year. 
D)should be prohibited.

Quizplus · Accepted Answer

The social MC lies above the private MC by $50 per ton.

Refer to the Figure Below