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The Figure Shows the Unregulated Market for a Pesticide, Where

Question 101

Multiple Choice

  The figure shows the unregulated market for a pesticide, where S is the supply curve and D is the demand curve. The demand curve is the same as the MSB curve. When factories produce the pesticide, they also create waste, which they dump into a lake on the outskirts of the town. The marginal external cost of the dumped waste is equal to the marginal private cost of producing the pesticide. -In the figure above, if no one owns the lake, what is the deadweight loss in the market? A)  $2,400 per month B)  $1,800 per month C)  $3,600 per month D)  zero The figure shows the unregulated market for a pesticide, where S is the supply curve and D is the demand curve. The demand curve is the same as the MSB curve. When factories produce the pesticide, they also create waste, which they dump into a lake on the outskirts of the town. The marginal external cost of the dumped waste is equal to the marginal private cost of producing the pesticide.
-In the figure above, if no one owns the lake, what is the deadweight loss in the market?


A) $2,400 per month
B) $1,800 per month
C) $3,600 per month
D) zero

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