The efficient amount of pollution in society:
A)is zero.
B)occurs when the detriment to society from every unit of pollution emitted is taken into account appropriately and remedies are created such that the supply curve for each industry is fully reflective of all marginal social costs.
C)is impossible to calculate and therefore it is probably better to set maximum limits for pollution output for each firm in industries that pollute in proportion to their profits.
D)is achieved without the government setting any emissions standards because the market equilibrium will coincide with the social optimum in the absence of intervention.

Question

Quizplus · Accepted Answer

The efficient amount of pollution in society occurs when the marginal social cost of pollution is fully reflected in the supply curve of each industry. This means that the cost to society, such as health problems and environmental damage, are taken into account when determining the optimal level of pollution. The market alone cannot achieve this outcome because private firms do not consider the external costs imposed on society. Therefore, remedies must be created to align the private cost of pollution with the social cost, such as taxes or cap-and-trade systems. Setting maximum limits for pollution output may not reflect the differences in marginal social cost between firms, while setting zero pollution is often costly and impractical. The efficient amount of pollution in society occurs when the detriment to society from every unit of pollution emitted is taken into account appropriately and remedies are created such that the supply curve for each industry is fully reflective of all marginal social costs. This means that the cost of pollution to society is factored into the decision-making process of firms, leading to a socially optimal outcome. Therefore, B is the correct choice. A is incorrect because some pollution may be necessary for certain industries to operate, and completely eliminating it may not be feasible. C is incorrect because setting maximum limits does not necessarily ensure that the socially optimal level of pollution is reached. D is incorrect because the market equilibrium may not necessarily align with the socially optimal level of pollution.

The Efficient Amount of Pollution in Society