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Figure: Pollution and Efficiency
-(Figure: Pollution and Efficiency) Look at the figure Pollution and Efficiency. In this market, whose sulfur emission is a result of production, an efficient solution is one in which:
A) MSB

Question

Use the following to answer questions:
Figure: Pollution and Efficiency 
-(Figure: Pollution and Efficiency) Look at the figure Pollution and Efficiency. In this market, whose sulfur emission is a result of production, an efficient solution is one in which:
A) MSB < MSC. 
B) MSC < MSB. 
C) total cost = total benefit. 
D) MSC = MSB.

Quizplus · Accepted Answer

An efficient solution in a market with externalities like pollution is achieved when the marginal social cost (MSC) equals the marginal social benefit (MSB), ensuring that the cost of pollution is balanced by the benefits of production.

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