FIGURE 12-2

-Refer to Figure 12-2, which represents the costs and benefits of pollution control. What is the optimal amount of spending on pollution control?

Question

FIGURE 12-2
 
-Refer to Figure 12-2, which represents the costs and benefits of pollution control. What is the optimal amount of spending on pollution control?

Quizplus · Accepted Answer

The optimal spending on pollution control is where marginal benefits equal marginal costs, which occurs at P2Q2. Any spending above or below this point would result in either too little or too much pollution control, which would not be cost-effective.

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