Use the following to answer question(s): A Market for Pollution

-(Exhibit: A Market for Pollution) If there is too much pollution:

Question

Use the following to answer question(s): A Market for Pollution
 
-(Exhibit: A Market for Pollution) If there is too much pollution:

Quizplus · Accepted Answer

If there is too much pollution, it implies that resources are overallocated to the production of the good that is associated with the generation of pollution. This results in a higher cost to society (MC) than the benefits received (MB), leading to the need for policies to reduce pollution levels. Option A is incorrect because output being at Q is a result of the equilibrium level when there is an optimal amount of pollution. Option B is incorrect because it suggests that resources are underallocated, which is not the case when there is too much pollution. Option D is incorrect because MC<MB is the condition for producing more output, not reducing pollution levels.

Use the Following to Answer Question(s): a Market for Pollution