For a good whose production creates pollution, when marginal social cost equals marginal social benefit, then
I. there is no pollution.
II. resources are utilised efficiently.
A) I only
B) II only
C) Neither I nor II
D) Both I and II

Question

Quizplus · Accepted Answer

When marginal social cost equals marginal social benefit, it indicates that resources are being used efficiently, taking into account the external costs of pollution. It does not mean there is no pollution, but rather that the level of production is at a point where the additional cost of pollution is equal to the additional benefit derived from producing one more unit of the good.

For a Good Whose Production Creates Pollution, When Marginal Social