-The table above describes the market for paper. The production of paper produces pollution. There are no external benefits. What is the efficient amount of paper?
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 efficient amount of paper?
A) 10 tons per week 
B) 60 tons per week 
C) 40 tons per week 
D) 30 tons per week

Quizplus · Accepted Answer

The efficient amount of paper is where the marginal social cost equals the marginal social benefit. Since there are no external benefits and pollution is an external cost, the efficient quantity is less than the market equilibrium, which is typically higher.

-The Table Above Describes the Market for Paper