-The Figure Above Shows the Costs Associated with Producing Paper

question 370

Multiple Choice

-The figure above shows the costs associated with producing paper. When paper is produced, there is some pollution runoff into a lake. If paper production is 4 tons per week, the outcome is

• A) efficient because marginal benefit equals marginal private cost.
• B) efficient because private and external costs are accounted for.
• C) inefficient because only marginal external benefits are accounted for.
• D) inefficient because marginal social cost exceeds marginal social benefit.