Cows graze on common pasture and can produce milk in the amounts shown in Table 1 . The marginal private cost of producing milk is zero.

Quantity of milk

(gallons per day)

Marginal external cost Marginal social benefit

(dollars per gallon)

0 0 15 20 2 12 40 4 9 60 6 6 80 8 3 100 10 0

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