If the pesticide factories own the lake, how much pesticide is produced?
When factories produce pesticide, they also create waste, which they dump into a lake on the outskirts of the town. The marginal external cost of the 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).

Transcribed Image Text:

150 125 D 100 75 50 25 10 20 30 40 50 Quantity (tons per week)