The socially efficient equilibrium emission standard sets the maximum rate of emissions equal to the ________.
A) the level of abatement that equates MAC and MD
B) level of emissions that maximizes total abatement cost
C) the level of emissions that minimizes total abatement cost
D) the level of emissions that equates MAC and MD

Question

Quizplus · Accepted Answer

The socially efficient equilibrium emission standard sets the maximum rate of emissions equal to the level of emissions that equates Marginal Abatement Cost (MAC) and Marginal Damage (MD). This ensures that the cost of reducing one more unit of pollution is equal to the harm caused by that unit of pollution. Therefore, D is the best choice.

The Socially Efficient Equilibrium Emission Standard Sets the Maximum Rate