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Figure: Palm Oil
-(Figure: Palm Oil) Refer to the figure. Indonesian palm oil producers deforest tropical rainforests to grow the plants that excrete the oil. According to this diagram, what is the external cost (per ton) of producing palm oil?
A) $4
B) $5
C) $6
D) $8

Question

Use the following to answer questions:
Figure: Palm Oil 
-(Figure: Palm Oil) Refer to the figure. Indonesian palm oil producers deforest tropical rainforests to grow the plants that excrete the oil. According to this diagram, what is the external cost (per ton) of producing palm oil?
A) $4 
B) $5 
C) $6 
D) $8

Quizplus · Accepted Answer

According to the diagram, the external cost (or negative environmental impact) of producing palm oil is $5 per ton. This cost is not reflected in the market price of palm oil and is borne by the environment and local populations affected by deforestation.

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