Exhibit 17.4

-Refer to Exhibit 17.4,which shows the market for pollution rights in an economy.The optimal level of air quality is ______
A)0.
B)40.
C)50.
D)70.
E)greater than 70.

Question

Exhibit 17.4
 
-Refer to Exhibit 17.4,which shows the market for pollution rights in an economy.The optimal level of air quality is ______
A)0. 
B)40. 
C)50. 
D)70. 
E)greater than 70.

Quizplus · Accepted Answer

The optimal level of air quality is where the marginal benefit of reducing pollution (MB) is equal to the marginal cost of reducing pollution (MC). In the graph, this occurs at a pollution level of 50. At this point, the total benefit (TB) is maximized, and any further reduction in pollution would result in higher marginal costs than benefits.

Exhibit 17.4 -Refer to Exhibit 17.4,which Shows the Market for Pollution Rights