-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 tons per week
B) 60 tons per week
C) 40 tons per week
D) 30 tons 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 tons per week 
B) 60 tons per week 
C) 40 tons per week 
D) 30 tons 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 produce at the equilibrium quantity without considering the external cost, which is typically higher than the socially optimal quantity.

-The Table Above Describes the Market for Paper