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QUESTION 6 [Externalities and Efficiency} 6.1 Using the graph below depict a demand-supply graph for the market for paper and paper products. The production of

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QUESTION 6 [Externalities and Efficiency} 6.1 Using the graph below depict a demand-supply graph for the market for paper and paper products. The production of paper and paper products creates pollution which affects human health as well as the eco-system. Show the market equilibrium for this market in general, with no government intervention. Be sure to identify any externalities that make social benet or cost different from private benefit or cost. Is the market efficient? Explain. (Remember to label the axes, curves and all important points.)

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