The socially optimal amount of pollution occurs where:
A)the marginal social benefit of pollution is equal to the marginal social cost of pollution.
B)the marginal social benefit of pollution is greater than the marginal social cost of pollution.
C)the marginal social benefit of pollution is less than the marginal social cost of pollution.
D)there is no pollution.

Question

Quizplus · Accepted Answer

The socially optimal amount of pollution occurs where the marginal social benefit of pollution is equal to the marginal social cost of pollution. This is because at this point, the benefits of pollution exactly offset the costs, resulting in overall net benefit to society. Any other point of pollution would result in either too much or too little pollution and would not be socially optimal.

The Socially Optimal Amount of Pollution Occurs Where