In the presence of pollution,social welfare is maximized by
A)reducing output and pollution until marginal benefit of less pollution is equal to the marginal cost of less output.
B)reducing output and pollution until the benefit curve (of less pollution)and cost curve (of less output)intersect.
C)reducing output and pollution until the benefits of pollution reduction just cover the costs of output reduction.
D)None of the above.

Question

Quizplus · Accepted Answer

Social welfare is maximized at the point where the marginal benefit of reducing pollution is equal to the marginal cost of reducing output. This is because reducing pollution beyond this point would require sacrificing too much output and lowering people's standard of living, while reducing pollution less than this point would result in too much pollution and negatively impact people's health and the environment. Therefore, the most efficient solution is to find the point of equilibrium where the benefits of pollution reduction equals the cost of output reduction. Choice A correctly describes this process.

In the Presence of Pollution,social Welfare Is Maximized by