The figure shows the unregulated market for a pesticide, where S is the supply curve and D is the demand curve. The demand curve is the same as the MSB curve. When factories produce the pesticide, they also create waste, which they dump into a lake on the outskirts of the town. The marginal external cost of the dumped waste is equal to the marginal private cost of producing the pesticide.
-In the figure above, if no one owns the lake, what is the equilibrium price of the pesticide?
A) $80 per ton
B) $40 per ton
C) $60 per ton
D) $30 per ton

Question

The figure shows the unregulated market for a pesticide, where S is the supply curve and D is the demand curve. The demand curve is the same as the MSB curve. When factories produce the pesticide, they also create waste, which they dump into a lake on the outskirts of the town. The marginal external cost of the dumped waste is equal to the marginal private cost of producing the pesticide.
-In the figure above, if no one owns the lake, what is the equilibrium price of the pesticide?
A) $80 per ton 
B) $40 per ton 
C) $60 per ton 
D) $30 per ton

Quizplus · Accepted Answer

The Answer of  The figure shows the unregulated market for a pesticide, where S is the supply curve and D is the demand curve. The demand curve is the same as the MSB curve. When factories produce the pesticide, they also create waste, which they dump into a lake on the outskirts of the town. The marginal external cost of the dumped waste is equal to the marginal private cost of producing the pesticide.
-In the figure above, if no one owns the lake, what is the equilibrium price of the pesticide?
A) $80 per ton 
B) $40 per ton 
C) $60 per ton 
D) $30 per ton

The Figure Shows the Unregulated Market for a Pesticide, Where