Figure 15.4 Suppose there are several paper mills producing paper for a market.These mills, located upstream from a fishing village, discharge a large amount of wastewater into the river.The waste material affects the number of fish in the river, and the use of the river for recreation and as a public water supply source.Figure 15.4 shows the paper market.Use this Figure to answer the following question(s). -Refer to Figure 15.4.Why is there a deadweight loss? A)Because the marginal social cost of producing each additional unit in excess of Q₂exceeds the marginal benefit B)Because the marginal private cost of producing each additional unit in excess of Q₂exceeds the marginal benefit C)Because the marginal social benefit of producing each additional unit in excess of Q₂ exceeds the private cost D)Because the marginal private benefit of producing each additional unit in excess of Q₂ exceeds the social cost

Question

Quizplus · Accepted Answer

The deadweight loss occurs when the marginal social cost of producing each additional unit in excess of Q₂ exceeds the marginal benefit. This means that the cost to society of producing an additional unit is greater than the benefit society receives from that unit, resulting in a net loss.

Figure 154 Suppose There Are Several Paper Mills Producing Paper