The optimal quantity of air pollution is
A) whatever amount of pollution is produced by the profit maximizing firm.
B) found by equating the marginal benefits from further reductions in pollution and the marginal costs of further reductions in pollution.
C) found by setting the quantity of air pollution equal to the quantity of water pollution.
D) a meaningless concept since monetary values cannot be attached to problems associated with pollution.

Question

Quizplus · Accepted Answer

The optimal quantity of air pollution is the point at which the marginal benefits of further reductions in pollution are equal to the marginal costs of further reductions in pollution. This means that any further reductions in pollution would cost more than the benefits they provide, and therefore would not be optimal. Option A is incorrect because the profit maximizing firm may not take into account the negative externalities of pollution. Option C is incorrect because the quantity of air pollution and water pollution are unrelated. Option D is incorrect because monetary values can be attached to the costs and benefits associated with pollution, although the calculation can be complex.

The Optimal Quantity of Air Pollution Is