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Figure: The Socially Optimal Quantity of Pollution
-(Figure: The Socially Optimal Quantity of Pollution)Use Figure: The Socially Optimal Quantity of Pollution.In the figure,firms are the only beneficiaries of pollution,and costs are borne solely by others in the society.The optimal level of pollution is:
A)zero since no pollution is best for society.
B)where the marginal social benefit curve intersects the quantity axis.
C)where the marginal social cost curve intersects the quantity axis.
D)where the marginal social benefit curve intersects the marginal social cost curve.

Question

Use the following to answer question:
Figure: The Socially Optimal Quantity of Pollution 
-(Figure: The Socially Optimal Quantity of Pollution)Use Figure: The Socially Optimal Quantity of Pollution.In the figure,firms are the only beneficiaries of pollution,and costs are borne solely by others in the society.The optimal level of pollution is:
A)zero since no pollution is best for society. 
B)where the marginal social benefit curve intersects the quantity axis. 
C)where the marginal social cost curve intersects the quantity axis. 
D)where the marginal social benefit curve intersects the marginal social cost curve.

Quizplus · Accepted Answer

The socially optimal quantity of pollution is where the marginal social benefit (MSB) is equal to the marginal social cost (MSC), which is at the intersection of the MSB and MSC curves. This level of pollution ensures that the overall benefit to society (MSB) is maximized while taking into account the costs borne by society (MSC). Choices A and B are incorrect because zero pollution is not always feasible or desirable, and the MSB curve intersects the quantity axis where pollution provides some benefit to firms. Choice C is incorrect because it only takes into account the cost of pollution and does not consider the benefits of pollution for firms.

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