Use the following to answer question:
-(Table: Coal Mine Pollution) Use Table: Coal Mine Pollution.The table shows the marginal social benefit and cost of various amounts of pollution from a coal mine.If 5 tons of pollution is produced,the outcome is _____ because _____.

Question

Use the following to answer question: 
-(Table: Coal Mine Pollution)Use Table: Coal Mine Pollution.The table shows the marginal social benefit and cost of various amounts of pollution from a coal mine.If 5 tons of pollution is produced,the outcome is _____ because _____.
A)efficient;MSB = MSC 
B)efficient;MSB > MSC 
C)inefficient;MSB > MSC 
D)inefficient;MSB < MSC

Quizplus · Accepted Answer

When 5 tons of pollution is produced, the MSB is $40 and the MSC is $60. Since MSB is less than MSC, the outcome is inefficient. The socially optimal outcome would be where MSB and MSC are equal, which occurs at 4 tons of pollution.

Use the Following to Answer Question