Suppose There Are Several Paper Mills Producing Paper for a Market.These

question 196

Multiple Choice

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 5-4 shows the paper market.Use this Figure to answer the following question(s) .
-Refer to Figure 5-4.Why is there a deadweight loss?

• A)because the marginal social cost of producing each additional unit in excess of Q2 exceeds the marginal benefit
• B)because the marginal private cost of producing each additional unit in excess of Q2 exceeds the marginal benefit
• C)because the marginal social benefit of producing each additional unit in excess of Q2 exceeds the private cost
• D)because the marginal private benefit of producing each additional unit in excess of Q2 exceeds the social cost

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Definitions:

Pricing Strategy

A plan or approach adopted by a business to set prices for its products or services to achieve specific marketing objectives.

LRMC

Long-Run Marginal Cost, which is the increase in cost a company faces to produce one additional unit of output when all factors of production are variable.

Infer High Quality

Deduce or conclude (information) to be of superior standards or excellent nature.

Promotional Campaigns

Marketing efforts aimed at increasing awareness or sales of a product or service through specific strategies and messaging.