Figure 5-9 Companies Producing Toilet Paper Bleach the Paper to Make It

Multiple Choice

Figure 5-9

Companies producing toilet paper bleach the paper to make it white. The bleach is discharged into rivers and lakes and causes substantial environmental damage. Figure 5-9 illustrates the situation in the toilet paper market.
-Refer to Figure 5-9.Suppose the government wants to use a Pigovian tax to bring about the efficient level of production.What should the value of the tax be?

A) (P₂- P₁) per unit of output
B) (P₂- P₀) per unit of output
C) (P₁- P₀) per unit of output
D) P₁ per unit of output