Figure 11-6 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 11-6 shows the paper market. Use this Figure to answer the following question(s).
-Refer to Figure 11-6.What is the economically efficient output level?

Question

Figure 11-6  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 11-6 shows the paper market. Use this Figure to answer the following question(s).
-Refer to Figure 11-6.What is the economically efficient output level?

Quizplus · Accepted Answer

The economically efficient output level is where the marginal cost of production is equal to the marginal social cost of pollution. This occurs at point E where Q₂ intersects MSC. Therefore, the best choice for the paper mills is to produce output level Q₂, which minimizes the total cost of production and pollution while maximizing societal welfare.

Figure 11-6 Suppose There Are Several Paper Mills Producing