Figure 5-9

Companies producing toilet paper bleach the paper to make it white. The bleach is discharged into rivers and lakes and causes substantial environmental damage. Figure 5-9 illustrates the situation in the toilet paper market.
-Refer to Figure 5-9.The efficient output is

Question

Figure 5-9
  
Companies producing toilet paper bleach the paper to make it white. The bleach is discharged into rivers and lakes and causes substantial environmental damage. Figure 5-9 illustrates the situation in the toilet paper market.
-Refer to Figure 5-9.The efficient output is

Quizplus · Accepted Answer

The efficient output is where the marginal social cost (MSC) intersects with the marginal social benefit (MSB), which is at point B. This is the optimal level of production where the benefits to society are maximized while also taking into account the environmental damage caused by bleaching the toilet paper. Therefore, Q₂ is the best choice.

Figure 5-9 Companies Producing Toilet Paper Bleach the Paper to Make It