To enforce the optimum level of emissions a government could set an emissions standard at the quantity:
A) where the MSB curve crosses the MCA curve.
B) located at the vertical intercept of the MSB curve.
C) located at the horizontal intercept of the MSB curve.
D) located at the vertical intercept of the MCA curve.
E) located at the horizontal intercept of the MCA curve.

Question

Quizplus · Accepted Answer

The optimum level of emissions occurs where the marginal social benefit (MSB) equals the marginal cost of abatement (MCA), which is where the MSB curve crosses the MCA curve. Therefore, choice A is the correct answer as it refers to this precise quantity. The other choices refer to points on either the MSB or MCA curve but do not necessarily represent the optimum level of emissions.

To Enforce the Optimum Level of Emissions a Government Could