ZAPCO Refinery is currently producing 100,000 barrels of refined oil per day. The marginal cost of this production is $40 per barrel and the marginal external cost is $30 per barrel. Suppose the marginal social benefit is $65 per barrel. In this case, ZAPCO is:
A.	imposing too much harm on the environment and should cut back production.
B.	is producing an efficient amount.
C.	is producing an amount less than the efficient amount.
D.	could make society better off by increasing production.
Answer:A
ZAPCO Refinery is currently producing 100,000 barrels of refined oil per day. The marginal cost of this production is $40 per barrel and the marginal external cost is $30 per barrel. Suppose the marginal social benefit is $65 per barrel. In this case, ZAPCO is:
A.	imposing too much harm on the environment and should cut back production. B.	is producing an efficient amount. C.	is producing an amount less than the efficient amount. D.	could make society better off by increasing production.