If the marginal social benefit received from pollution is greater than its marginal social cost in a market:
A)society's well-being can be improved if the quantity of pollution decreases.
B)firms in the market produce the socially optimal level 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 of pollution exceeds its marginal social cost, it indicates that the current level of pollution is less than the socially optimal level. Therefore, increasing pollution up to the point where marginal social benefit equals marginal social cost would improve society's well-being, implying that firms are currently producing too little pollution.

If the Marginal Social Benefit Received from Pollution Is Greater