This graph shows the marginal cost and marginal benefit associated with roadside litter clean up. Assume that the marginal benefit curve and marginal cost curve each have their usual slope. A state initiative requiring towns to spend at least $20 per day on litter removal would be ________ because ________.
A)efficient; reducing litter is socially optimal
B)inefficient; the marginal cost of litter removal would exceed the marginal benefit
C)inefficient; $20 is insufficient to remove all of the litter
D)efficient; it solves the inefficiency created by the negative externality

Question

This graph shows the marginal cost and marginal benefit associated with roadside litter clean up.  Assume that the marginal benefit curve and marginal cost curve each have their usual slope.  A state initiative requiring towns to spend at least $20 per day on litter removal would be ________ because ________.
A)efficient; reducing litter is socially optimal 
B)inefficient; the marginal cost of litter removal would exceed the marginal benefit 
C)inefficient; $20 is insufficient to remove all of the litter 
D)efficient; it solves the inefficiency created by the negative externality

Quizplus · Accepted Answer

At $20, the marginal cost of removal is greater than the additional benefit.

This Graph Shows the Marginal Cost and Marginal Benefit Associated