Suppose that a wood mill is situated on the bank of the Oti River in Ghana. The private marginal cost (MC) of producing wood (in cedis per ton) is given by the function MC = 10 + 0.5Y , where Y is tons of

wood produced. In addition to this private marginal cost, an external cost, which is borne by the wider

community but not by the polluting firm itself, is incurred. Each ton of wood produces pollutant flows

into the river which cost the community an amount of 10 cedis. The marginal benefit (MB) to society of

each ton of produced wood in cedis, is given by MB = 30 − 0.5Y​