Figure 5-7
-Refer to Figure 5-7. Which of the following statements is true?
A) At QE the benefits of reducing pollution outweighs the cost of pollution reduction.
B) At QB society is under allocating resources to pollution reduction.
C) The optimal quantity of pollution reduction is QB.
D) The optimal quantity of pollution reduction is QE.

Question

Figure 5-7 
-Refer to Figure 5-7. Which of the following statements is true?
A) At QE the benefits of reducing pollution outweighs the cost of pollution reduction. 
B) At QB society is under allocating resources to pollution reduction. 
C) The optimal quantity of pollution reduction is QB. 
D) The optimal quantity of pollution reduction is QE.

Quizplus · Accepted Answer

At QB, the marginal benefit of pollution reduction (MB) exceeds the marginal cost of pollution reduction (MC), which means that society could benefit from reducing pollution beyond the current level. At QE, MC is greater than MB, indicating that the cost of reducing pollution exceeds the benefit, so society should not reduce pollution beyond the current level. Therefore, the optimal quantity of pollution reduction is QB.

Figure 5-7 -Refer to Figure 5-7. Which of the Following Statements Is