Question
[The drainage of waste products from the chemical factory, Ultra Chemicals, situated along the banks of the Misty River has led to the formation of
[The drainage of waste products from the chemical factory, Ultra Chemicals, situated along the banks of the Misty River has led to the formation of a dead zone in the river that cannot support aquatic life.]
a) [Without any government intervention, will the Ultra Chemical produce a socially optimal quantity? Why or why not? Explain your answer and with the help of suitable diagrams.
b) [Does Ultra Chemical impose a deadweight loss on the society? Draw the diagram to show the deadweight loss to the society.
c) [How can a government intervene to improve upon the outcome from society's point of view? Diagram not needed.
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