If the marginal benefit of reducing water pollution is constant at $10 per ton, then it is efficient to reduce water pollution
A) to zero.
B) until the marginal cost of reducing water pollution equals $10 per ton.
C) as long as the marginal cost of reducing water pollution is greater than $10 per ton.
D) to whatever level the market determines.

Question

Quizplus · Accepted Answer

The efficient level of pollution reduction occurs when the marginal cost of reducing pollution is equal to the marginal benefit of reducing pollution. In this case, the marginal benefit of reducing pollution is constant at $10 per ton, meaning that for every ton of pollution reduced, society receives a benefit of $10. Thus, it is efficient to keep reducing pollution as long as the marginal cost of reducing it is less than $10 per ton. However, once the marginal cost of reducing pollution reaches $10 per ton, any further reduction in pollution would cost more than the benefit society receives, making it inefficient to reduce pollution any further. Therefore, the efficient level of pollution reduction is when the marginal cost of reducing pollution equals $10 per ton.

If the Marginal Benefit of Reducing Water Pollution Is Constant