-The above figure shows the marginal benefit to a firm of polluting in the local river while producing its output,and the marginal cost to the surrounding neighbors.The marginal cost of production is zero for the firm.If property rights are not defined,how much pollution will occur?
A) 0 units
B) 500 units
C) 1000 units
D) more than 1000 units

Question

-The above figure shows the marginal benefit to a firm of polluting in the local river while producing its output,and the marginal cost to the surrounding neighbors.The marginal cost of production is zero for the firm.If property rights are not defined,how much pollution will occur?
A) 0 units 
B) 500 units 
C) 1000 units 
D) more than 1000 units

Quizplus · Accepted Answer

If property rights are not defined, the firm will pollute until the marginal benefit of polluting equals zero, which occurs at 1000 units, as there is no cost to the firm for polluting.

-The Above Figure Shows the Marginal Benefit to a Firm