Pig Pen Industries is currently producing 5000 tons of paper per day. At this level of production, marginal social costs are $10 per ton while marginal social benefits are $12 per ton. We know that Pig Pen:

Question

Quizplus · Accepted Answer

Pig Pen is producing at a level where marginal costs ($10) are less than marginal benefits ($12) indicating that they are not producing enough paper relative to what would be efficient for society. Therefore, the company is producing an amount less than the efficient amount. To increase net benefits for society, Pig Pen could increase its production.

Pig Pen Industries Is Currently Producing 5000 Tons of Paper