The socially optimal level of pollution occurs when marginal damage is less than marginal abatement costs.

Question

Quizplus · Accepted Answer

The socially optimal level of pollution occurs when marginal damage equals marginal abatement costs, not when one is less than the other. This balance ensures that the cost of reducing pollution by one more unit is exactly equal to the damage that one more unit of pollution would cause, optimizing social welfare.

The Socially Optimal Level of Pollution Occurs When Marginal Damage