The marginal social benefit received from pollution is less than its marginal social cost in the market for highly polished glass.In this situation:
A)firms in the market produce the socially optimal level of pollution.
B)society's well-being cannot be improved by changing the quantity of pollution.
C)firms in the market produce too much pollution.
D)firms in the market produce too little pollution.

Question

Quizplus · Accepted Answer

When the marginal social benefit received from pollution is less than its marginal social cost, it means that the negative externalities of pollution are not being taken into account in the market. Therefore, firms in the market are not paying for the full cost of their pollution, leading them to produce more pollution than is socially optimal. This results in choice C, where firms in the market produce too much pollution.

The Marginal Social Benefit Received from Pollution Is Less Than