Since air pollution creates a negative externality,
A)social welfare will be enhanced when some, but not all air pollution is eliminated.
B)social welfare is optimal when all air pollution is eliminated.
C)governments should encourage private firms to consider only private costs.
D)the free market result maximizes social welfare.

Question

Quizplus · Accepted Answer

Social welfare is enhanced when some air pollution is eliminated because the marginal cost of eliminating all pollution may exceed the marginal benefit, leading to an inefficient allocation of resources.

Since Air Pollution Creates a Negative Externality