This Question 2 pts This Test 30 pts The graph shows the mar

This Question: 2 pts This Test 30 pts The graph shows the market for pesticide. The firm that produces the pesticide dumps waste into a river. If no one owns the river, the market equilibrium occurs at a price of quantity of tons a week. OA S150, 4.000 OB, $250; 8,000 OC, S850, 8.000 OD, SA50: 4,000 The market equilibrium is a ton and a Time Remaining Price and cost (dollars per ton) MSc 550........ 150 Quantity (thousands of tons per week) 0 of 15 complete

Solution

Equilibrium is established where the demand and supply are equal. since river is not owned by the residents. hence firm does not have any legal obligation to compensate the residents for released waste. Firm will not internalise the external marginal cost.

Equlibrium Quantity is 8,000

Equilibrium Price is $ 250

Or Correct Option (B)