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The Figure Shows the Unregulated Market for a Pesticide, Where

Question 250

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  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 equilibrium price of the pesticide? A)  $80 per ton B)  $40 per ton C)  $60 per ton D)  $30 per ton 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 equilibrium price of the pesticide?


A) $80 per ton
B) $40 per ton
C) $60 per ton
D) $30 per ton

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