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.Let's suppose the government imposes a tax of $50 per unit of toilet paper to bring about the efficient level of production.What happens to the market price of toilet paper?

A) It rises by $50 per unit.
B) It rises by more than $50 per unit.
C) It rises by less than $50 per unit.
D) It remains the same because the tax is imposed on producers who create the externality.