If the town owns the river and taxes cotton growers so that the efficient quantity is grown, how much tax revenue does the town receive? Is the quantity of waste zero? Explain your answer.

Suppose that the cotton growers use a chemical to control insects and waste flows into the town’s river.
The marginal social cost of producing the cotton is double the marginal private cost.

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Price (dollars per ton) 150 | 125 100 75 50 25 0 100 200 S D 300 400 500 Quantity (tons per month)