Refer to the Figure Below

Multiple Choice

Refer to the figure below. In this case, the private market ________ resources efficiently because ________.  

A) does not allocate; demand and supply do not cross at the market equilibrium
B) does not allocate; some of the costs of paper production do not fall on producers
C) allocates; firms are motivated to maximize profit
D) allocates; consumers are willing to pay the external cost of production