Suppose that the only way to reduce pollution from paper production is to reduce output. The government imposes a tax equal to the marginal harm from the pollution on the monopoly producer. This is illustrated in the diagram to the right where MCp is private marginal cost and MCS is social (post-tax) marginal cost. The net increase in social welfare from the imposition of the tax is given by the area: :3- A. E + F [3- B. E + B :1} C. AE Ci- D. There is a net welfare loss with the imposition of the tax. p, $ per ton Q, Tons of output per day