-The table above describes the market for paper. The production of paper produces pollution. There are no external benefits. What is the quantity produced if the market for paper is unregulated?
A) 10 tonnes per week
B) 40 tonnes per week
C) 60 tonnes per week
D) 30 tonnes per week

Question

-The table above describes the market for paper. The production of paper produces pollution. There are no external benefits. What is the quantity produced if the market for paper is unregulated?
A) 10 tonnes per week 
B) 40 tonnes per week 
C) 60 tonnes per week 
D) 30 tonnes per week

Quizplus · Accepted Answer

In an unregulated market, the quantity produced is determined by the equilibrium where supply equals demand. Since there are no external benefits and pollution is an external cost, the market will overproduce compared to the socially optimal level. Therefore, the quantity produced is likely the highest option, 60 tonnes per week.

-The Table Above Describes the Market for Paper