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Figure: Efficiency and Pollution
-(Figure: Efficiency and Pollution) Look at the figure Efficiency and Pollution. In the absence of government intervention, the marginal social cost of pollution will exceed the marginal benefit of pollution by:
A) $25.00.
B) $16.67.
C) $15.00.
D) $0.00.

Question

Use the following to answer questions:
Figure: Efficiency and Pollution 
-(Figure: Efficiency and Pollution) Look at the figure Efficiency and Pollution. In the absence of government intervention, the marginal social cost of pollution will exceed the marginal benefit of pollution by:
A) $25.00. 
B) $16.67. 
C) $15.00. 
D) $0.00.

Quizplus · Accepted Answer

The marginal social cost of pollution is the cost to society of producing one more unit of pollution. The marginal benefit of pollution is the benefit to society of producing one more unit of pollution. In the absence of government intervention, the marginal social cost of pollution will exceed the marginal benefit of pollution by the amount of the external cost of pollution. The external cost of pollution is the cost to society that is not borne by the polluter. In this case, the external cost of pollution is $25.00.

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