Suppose the production of electricity generates pollution.In this case,the optimal level of electricity is produced when the marginal social benefit from electricity production equals the _____
A)marginal private cost of electricity production.
B)marginal social cost of electricity production.
C)marginal external cost of electricity production.
D)marginal cost of labor used in electricity production.
E)marginal cost of capital used in electricity production.

Question

Quizplus · Accepted Answer

The optimal level of electricity production is achieved when the marginal social benefit equals the marginal social cost. This is because marginal social benefit reflects the societal value of electricity production, while marginal social cost includes both the private cost of production as well as any external costs, such as pollution. Therefore, the correct choice is B, the marginal social cost of electricity production.

Suppose the Production of Electricity Generates Pollution