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The socially optimal quantity of pollution is:
A) zero.
B) the quantity at which marginal social cost is equal to zero.
C) the quantity at which marginal social benefit is equal to zero.
D) the quantity at which marginal social cost is equal to the marginal social benefit.
Socially Optimal
A condition or point at which the societal welfare is maximized, considering both efficiency and equity.
Marginal Social Cost
The total cost to society of producing an additional unit of a good, including both private costs and any externalities.
Marginal Social Benefit
The added value to the general population from the manufacture or use of one more unit of a good or service.
- Acquire an understanding of the marginal social benefit and its function in identifying the socially optimal pollution quantity.
- Understand the relationship between marginal social benefit, marginal social cost, and the efficient quantity of pollution or externalities.
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Learning Objectives
- Acquire an understanding of the marginal social benefit and its function in identifying the socially optimal pollution quantity.
- Understand the relationship between marginal social benefit, marginal social cost, and the efficient quantity of pollution or externalities.
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