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

Verified
Correct Answer:
Verified
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