Problem
The production of clean, white paper is really a dirty job. Paper mills generate air and water pollutants. In the diagram, draw a downward sloping demand for paper and a horizontal marginal private cost curve at $20. Identify the private-sector equilibrium level of output of paper. Then add a marginal social cost curve showing that each ton of paper produced generates an additional $2 per ton of external costs. Identify the socially efficient level of output.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.