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Figure: MSB and MSC of Pollution
-(Figure: MSB and MSC of Pollution) Use Figure: MSB and MSC of Pollution.Assume that firms are the only beneficiaries of pollution and that costs are borne solely by others in the society.What level of pollution would be emitted in a market economy without government regulation?

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Use the following to answer question:
Figure: MSB and MSC of Pollution

-(Figure: MSB and MSC of Pollution) Use Figure: MSB and MSC of Pollution.Assume that firms are the only beneficiaries of pollution and that costs are borne solely by others in the society.What level of pollution would be emitted in a market economy without government regulation?

Quizplus · Accepted Answer

In a market economy without government regulation, firms will emit pollution up to the point where their marginal private benefit equals zero, which is typically the highest level of pollution, Q4, as they do not account for external costs.

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