-Producing Leather Creates External Costs in the Form of Water

Multiple Choice

-Producing leather creates external costs in the form of water pollution. The figure above illustrates the market for leather. In the absence of any government regulation, how many tonnes of leather will be produced?

A) 300 tonnes
B) 0 tonnes
C) 200 tonnes
D) More than 300 tonnes
E) None of the above answers is correct.