Figure 159 Companies Producing Toilet Paper Bleach the Paper to to Make

Multiple Choice

Figure 15.9 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 15.9 illustrates the situation in the toilet paper market.
-Refer to Figure 15.9.An efficient way to get the firm to produce the socially optimal output level is

A) for government to set a quota on the quantity of toilet paper that the toilet paper industry can produce.
B) to impose a tax to make the industry bear the external costs it creates.
C) to grant a subsidy to enable the industry to internalise the external costs of production.
D) to assign property rights to the firms in the industry.