The additional cost imposed on society as a whole by an additional unit of pollution is:
A)the marginal social benefit of pollution.
B)the marginal social cost of pollution.
C)the optimal Pigouvian tax.
D)a technology spillover.

Question

Quizplus · Accepted Answer

The additional cost imposed on society as a whole by an additional unit of pollution is the marginal social cost of pollution. This includes the cost not only to the polluter but also to third parties who are affected by the pollution, such as individuals suffering from health problems and the degradation of natural resources. The marginal social cost is the optimal level at which to reduce pollution through measures such as Pigouvian taxes, which aim to internalize the external costs of pollution.

The Additional Cost Imposed on Society as a Whole by an Additional