-The Figure Above Shows the Costs Associated with Producing Paper

Multiple Choice

-The figure above shows the costs associated with producing paper. When paper is produced, there is some pollution runoff into a lake. If paper production is 4 tons per week, the outcome is

A) efficient because marginal benefit equals marginal private cost.
B) efficient because private and external costs are accounted for.
C) inefficient because only marginal external benefits are accounted for.
D) inefficient because marginal social cost exceeds marginal social benefit.