The socially efficient scale maximizes the net social benefits from a project because
A) consumer preferences as revealed in market prices are maximized where MAC=MD.
B) damages are minimized where MAC=MD.
C) total abatement costs are less that total damage costs where MAC=MD.
D) net social benefits are maximized where MAC = MD.

Question

Quizplus · Accepted Answer

The socially efficient scale is where the marginal cost of abatement (MAC) is equal to the marginal damage (MD) caused by pollution. This is because at this point, the net social benefit is maximized. Therefore, the correct answer is D.

The Socially Efficient Scale Maximizes the Net Social Benefits from a Project