Figure 11.11 Companies producing toilet paper bleach the paper to make it white. The bleach is discharged into rivers and lakes and causes substantial environmental damage. Figure 11.11 illustrates the situation in the toilet paper market.
-Refer to Figure 11.11.The private profit-maximising output level is -.

Question

Figure 11.11  Companies producing toilet paper bleach the paper to make it white. The bleach is discharged into rivers and lakes and causes substantial environmental damage. Figure 11.11 illustrates the situation in the toilet paper market.
-Refer to Figure 11.11.The private profit-maximising output level is -.

Quizplus · Accepted Answer

The optimal output level for the private firm can be determined where the marginal cost (MC) curve intersects with the marginal revenue (MR) curve, which is at point E. At this point, the price (P) is equal to the marginal cost (MC) and the output level is Q₃. This level of output leads to a positive profit for the private firm. However, as the diagram shows, this level of output is not socially optimal because it leads to negative externalities in the form of environmental damage from the bleach discharge into rivers and lakes.

Figure 1111 Companies Producing Toilet Paper Bleach the Paper to to Make