If an emission standard is set to the right of the socially efficient point of emissions, the result will be a socially inefficient level of pollution and _________ will be greater than __________.
A) total damages; total abatement costs
B) total abatement costs; total damages
C) marginal damages; marginal abatement costs
D) marginal abatement costs; marginal damages

Question

Quizplus · Accepted Answer

A socially efficient level of pollution occurs at the point where marginal damages (the cost to society from each additional unit of pollution) equals marginal abatement costs (the cost to society of reducing each additional unit of pollution). If the emission standard is set to the right of this point, the level of pollution will be higher than the socially efficient level, meaning that each additional unit of pollution will cause more damage to society than it costs to abate. This means that marginal damages will be greater than marginal abatement costs.

If an Emission Standard Is Set to the Right of the Socially