FIGURE 12-2

-Refer to Figure 12-2, which represents the costs and benefits of pollution control. What might overly stringent pollution-control legislation result in the marginal social benefit being equal to?

Question

FIGURE 12-2
 
-Refer to Figure 12-2, which represents the costs and benefits of pollution control. What might overly stringent pollution-control legislation result in the marginal social benefit being equal to?

Quizplus · Accepted Answer

Overly stringent pollution-control legislation could result in the marginal social benefit being equal to P1, as it would increase the cost of the pollution control measures to a point where the benefit derived from it does not outweigh the cost. In this case, the cost of implementing pollution control measures would be higher than the benefit derived from it. Therefore, the optimal choice for pollution control measures would be a level of pollution reduction such that the marginal social cost is equal to the marginal social benefit, which occurs at point B.

FIGURE 12-2 -Refer to Figure 12-2, Which Represents the Costs and Benefits