Figure 4-21
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 4-21 illustrates the situation in the toilet paper market.
-Refer to Figure 4-21.The efficient output is

Question

Figure 4-21
  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 4-21 illustrates the situation in the toilet paper market.
-Refer to Figure 4-21.The efficient output is

Quizplus · Accepted Answer

The efficient output is the one where the marginal cost of production equals the marginal benefit to society. In this case, it is at point Q₂ where the marginal cost curve intersects with the demand (marginal benefit) curve. At any other level of output, there is either a deadweight loss (Q₁ and Q₃) or inefficiency due to overproduction (Q₄). Therefore, producing at Q₂ is the best choice.

Figure 4-21 Companies Producing Toilet Paper Bleach the Paper to Paper