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A Paper Mill Discharges Chemicals into a River Which Pollutes

Question 1

Multiple Choice

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 allocatively efficient level of output is ________ units.


A) 0
B) 10
C) 15
D) 25
E) 30

Correct Answer:

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