Figure 7B

-Refer to Figure 7B. The marginal damage cost curve implies that …
A) Beyond Q2, society's WTP for the next incremental increase in environmental improvement is extremely high.
B) Beyond Q2, society's WTP for the next incremental increase in environmental improvement is extremely low.
C) At Q1, society's WTP is optimized.
D) At Q2, society's WTP is optimized.
E) None of the above.

Question

Figure 7B
 
-Refer to Figure 7B. The marginal damage cost curve implies that …
A) Beyond Q2, society's WTP for the next incremental increase in environmental improvement is extremely high. 
B) Beyond Q2, society's WTP for the next incremental increase in environmental improvement is extremely low. 
C) At Q1, society's WTP is optimized. 
D) At Q2, society's WTP is optimized. 
E) None of the above.

Quizplus · Accepted Answer

The marginal damage cost curve intersects the marginal abatement cost curve at Q2, which is the socially optimal level of pollution reduction. Beyond Q2, the marginal damage cost curve is extremely steep, indicating that society's willingness to pay for further environmental improvement is low.

Figure 7B -Refer to Figure 7B. the Marginal Damage Cost Curve Implies