If water quality law prevents the achievement of the efficiency criterion
A) that law must be repealed
B) a "second-best" economic solution is to identify cost-effective policy initiatives
C) cost-effectiveness is also prevented
D) polluting sources should abate up to the point where total social benefits are maximized

Question

Quizplus · Accepted Answer

If water quality law prevents the achievement of the efficiency criterion, it may not be feasible to repeal the law. Therefore, a "second-best" economic solution is to identify cost-effective policy initiatives that can be implemented within the constraints of the law. This will help to achieve the efficiency criterion while also complying with the relevant regulations. Cost-effectiveness is not prevented by this approach, and it is a practical solution that can help to balance economic and environmental goals. Option D is also a possible solution, but it is not the best choice because it assumes that polluting sources will voluntarily abate up to the point of social benefit maximization, which is not always the case.

If Water Quality Law Prevents the Achievement of the Efficiency