If the production of a good creates pollution,then the
A)marginal social benefit curve lies above the marginal private benefit curve.
B)marginal social cost curve lies above the marginal private cost curve.
C)marginal social benefit curve lies below the marginal private benefit curve.
D)marginal social cost curve lies below the marginal private cost curve.
E)marginal social benefit curve intersects the marginal private cost curve at the efficient quantity.

Question

Quizplus · Accepted Answer

When a good production creates pollution, there is a negative externality. This means that the marginal social cost of producing the good is higher than the marginal private cost. In other words, the cost to society as a whole (including the cost of pollution) is greater than the cost borne by the producer. As a result, the marginal social cost curve lies above the marginal private cost curve.

If the Production of a Good Creates Pollution,then the