Assuming that the marginal social benefit (MSB) of environmental quality is known, then A) the MSB represents the demand for environmental quality B) total social benefits (TSB) of abatement, A₁, can be captured as an area under the MSB up to A₁ C) incremental benefits are measured as an area under the MSB between the pre- and post-policy abatement levels D) all of the above E) none of the above

Question

Quizplus · Accepted Answer

The MSB reflects the demand for environmental quality, thus representing the benefit that society receives from environmental quality. The total social benefits of abatement can be calculated as the area under the MSB curve, up to the abatement level achieved (A₁). Lastly, the incremental benefits are measured as the area under the MSB curve between the pre- and post-policy abatement levels. Therefore, all of the above statements are correct.

Assuming That the Marginal Social Benefit (MSB) of Environmental Quality