Which of the following statements is (are) TRUE?
I. An inefficiency occurs if there is too much pollution.
II. An inefficiency occurs if there is too little pollution.
III. It can be efficient for there to be a positive level of pollution.
A) I and III
B) I, II, and III
C) III
D) II

Question

Quizplus · Accepted Answer

All three statements are true. Statement I is true because too much pollution indicates that the costs of pollution (health problems, environmental damage) exceed the benefits of the activities causing it, leading to inefficiency. Statement II is true because having too little pollution might mean that society is foregoing beneficial activities (like manufacturing or transportation) to an extent that the cost of lost opportunities exceeds the benefits of having less pollution, also indicating inefficiency. Statement III is true because a certain level of pollution is often a byproduct of beneficial economic activities (like production and transportation), and completely eliminating pollution could mean giving up on those benefits entirely, which would not be efficient. The optimal level of pollution is not zero but is where the marginal cost of reducing pollution equals the marginal benefit of the reduction.

Which of the Following Statements Is (Are) TRUE