Draw a graph to illustrate the market equilibrium. On your graph, show the efficient quantity of water taken.

A natural spring runs under land owned by ten people. Each person has the right to sink a well and can take water from the spring at a constant marginal cost of $5 a gallon. Table 2 sets out the marginal external cost and the marginal social benefit from the water.

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TABLE 2 Quantity of water (gallons per day) 10 20 30 40 50 60 70 Marginal Marginal social external cost benefit (dollars per gallon) 12345 2 6 7 6987654 10