Suppose That in the Market for Paper,demand Is P =

question 9

Multiple Choice

Suppose that in the market for paper,demand is p = 100 - Q.The private marginal cost is MC^p = 10 + Q.Pollution generated during the production process creates external marginal harm equal to MC^e = Q.What is the socially optimal level of output?

• A) 20
• B) 25
• C) 30
• D) 45

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