Advocates of marginal social cost (MSC)-marginal social benefit (MSB) analysis would suggest spending
A) up to the point of greatest divergence between MSC and MSB.
B) where MSC = MSB.
C) the largest possible amount on pollution controls regardless of the benefits.
D) up to the point where MSB = 0.

Question

Quizplus · Accepted Answer

Marginal social cost (MSC)-marginal social benefit (MSB) analysis suggests that resources should be allocated to the point where MSC = MSB. This is because at this point, the social cost is equal to the social benefit, and any additional spending would result in a decrease in social welfare. Therefore, spending should be allocated efficiently to maximize social welfare.

Advocates of Marginal Social Cost (MSC)-Marginal Social Benefit (MSB) Analysis