Which of the following statements about the economically efficient level of air pollution is correct?
A)The economically efficient level of pollution is zero.
B)The economically efficient level of pollution occurs where all social costs equal all social benefits.
C)The economically efficient level of pollution occurs where the marginal cost of pollution reduction equals the marginal social benefit of reduction.
D)The economically efficient level of pollution occurs where total benefits of pollution reduction are maximised.

Question

Quizplus · Accepted Answer

The economically efficient level of pollution occurs where the marginal cost of pollution reduction equals the marginal social benefit of reduction. This means that reducing pollution any further would cost more than the benefits gained from reduced pollution, and not reducing pollution enough would mean that the benefits of reducing pollution would exceed the costs saved from not implementing the reduction. The economically efficient level of pollution is not zero as it may be too expensive or impossible to completely eliminate all pollution, and it is not where total benefits of pollution reduction are maximised as this may not necessarily correspond to the level where marginal costs and marginal benefits are equal.

Which of the Following Statements About the Economically Efficient Level