-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 firm's neighbor.The marginal cost of production is zero for the firm.If there is just one neighbor who owns the river,how much pollution is likely to 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 firm's neighbor.The marginal cost of production is zero for the firm.If there is just one neighbor who owns the river,how much pollution is likely to occur?
A) 0 units 
B) 500 units 
C) 1000 units 
D) more than 1000 units.

Quizplus · Accepted Answer

The optimal amount of pollution occurs where the marginal benefit to the firm equals the marginal cost to the neighbor. This is typically at the intersection point of the marginal benefit and marginal cost curves, which, based on the description, is at 500 units.

-The Above Figure Shows the Marginal Benefit to a Firm