The optimal level of pollution occurs where the marginal social benefit is equal to
A)marginal private cost, which equals marginal social cost plus marginal external cost
B)marginal social cost, which equals marginal private cost plus marginal external cost
C)marginal external cost, which equals marginal private cost plus marginal social cost
D)marginal private cost, which equals marginal social cost plus marginal internal cost
E)marginal social cost, which equals marginal private cost plus marginal internal cost

Question

Quizplus · Accepted Answer

The optimal level of pollution occurs where the marginal social cost is equal to the marginal social benefit. This is because the marginal social cost represents the cost to society as a whole (including externalities) while the marginal social benefit represents the benefit to society as a whole. Choice B correctly identifies this balance between costs and benefits.

The Optimal Level of Pollution Occurs Where the Marginal Social