Figure 5-9 Companies Producing Toilet Paper Bleach the Paper

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