Use the following to answer questions:
Figure: The Socially Optimal Quantity of Pollution
-(Figure: The Socially Optimal Quantity of Pollution) In the figure The Socially Optimal Quantity of Pollution, without government intervention:
A) firms will continue to pollute until the marginal social benefit is zero.
B) firms will continue to pollute until the marginal social benefit is $200.
C) the optimal quantity of pollution will occur.
D) The outcome cannot be determined without more information.

Question

Use the following to answer questions:
Figure: The Socially Optimal Quantity of Pollution 
-(Figure: The Socially Optimal Quantity of Pollution) In the figure The Socially Optimal Quantity of Pollution, without government intervention:
A) firms will continue to pollute until the marginal social benefit is zero. 
B) firms will continue to pollute until the marginal social benefit is $200. 
C) the optimal quantity of pollution will occur. 
D) The outcome cannot be determined without more information.

Quizplus · Accepted Answer

Without government intervention, firms will continue to pollute until the marginal social benefit of pollution is zero, as they do not account for the external costs of pollution.

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