Suppose that Sweden imposes a retail disposal charge on household batteries. To assure that allocative efficiency is achieved, this charge should be set equal to

Question

Quizplus · Accepted Answer

For allocative efficiency, the disposal charge should be set equal to the marginal external benefit (MEB) at the efficient equilibrium (QS1U1B1). This ensures that the marginal social cost (MSC) equals the marginal social benefit (MSB), which is necessary for allocative efficiency. Therefore, the correct choice is D, the ‒MEB at the efficient equilibrium.

Suppose That Sweden Imposes a Retail Disposal Charge on Household