A paper mill discharges chemicals into a river which pollutes 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 MB = 35 - 0.5Q.
The marginal external cost at the competitive free-market equilibrium is
A) 5.
B) 10.
C) 15.
D) 20
E) 25.
Correct Answer:
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