What is the quantity of pesticide produced if no one owns the lake and what is the efficient quantity of pesticide? What is the deadweight loss?

Figure 1 illustrates the unregulated market for a pesticide. When factories produce pesticide, they also create waste, which they dump into a lake on the edge of the town. The marginal external cost of the dumped waste is equal to the marginal private cost of producing the pesticide (that is, the marginal social cost of producing the pesticide is double the marginal private cost).

Figure 1

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FIGURE 1 Price (dollars per ton) 150 + 125 100 75 + 50 25 0 10 S D 20 30 40 50 Quantity (tons per week)