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

Quizplus · Accepted Answer

Given that the firm owns the river and there is only one neighbor affected by the pollution, the firm will likely pollute until its marginal benefit equals the marginal cost to the neighbor. This is typically represented by the intersection point on a graph of marginal benefit and marginal cost curves, which, based on standard economic theory, would suggest an equilibrium point. Without seeing the actual figure, the scenario described implies that the firm will continue to pollute as long as the benefits of doing so (to the firm) outweigh the costs (borne by the neighbor). Assuming a rational economic model, this would likely result in a specific, finite amount of pollution that balances these factors, rather than an extreme or zero amount.

-The Above Figure Shows the Marginal Benefit to a Firm