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.What is the economically efficient output level?

Question

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.What is the economically efficient output level?

Quizplus · Accepted Answer

The economically efficient output level is where the marginal social cost (MSC) intersects with the marginal social benefit (MSB), which is at point U1B12S1. This represents the socially optimal level of paper production, where the benefits to society from producing an additional unit of paper equal the costs to society. Therefore, the best choice is for paper mills to produce output level Q₂ to achieve economic efficiency while minimizing the negative impact on the environment and society.

Figure 154 Suppose There Are Several Paper Mills Producing Paper