A paper mill discharges chemicals into a river which washes the shores of a downstream resort area.The private marginal cost,social marginal cost,and marginal benefit associated with the production of paper are given by the following equations: MCP = 5 + Q,MCS = 10 + 2Q,and MB = 35 - 0.5Q.A competitive free market will produce output of units,and this amount is than the allocatively efficient level of output.
A) 15; more
B) 25; more
C) 5; less
D) 20; more
E) 10; less
Correct Answer:
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