If the marginal benefit received from pollution is less than its marginal cost, then:
A)society's well-being can be improved if the quantity of pollution increases.
B)society's well-being can be improved if the quantity of pollution decreases.
C)society has achieved its socially optimal level of pollution.
D)the market is producing too little pollution.

Question

Quizplus · Accepted Answer

If the marginal benefit received from pollution is less than its marginal cost, then the cost of pollution exceeds the benefits. In this case, society's well-being can be improved if the quantity of pollution decreases, which will reduce the costs associated with pollution. This will also lead the market to produce a socially optimal level of pollution. Therefore, the best choice is B.

If the Marginal Benefit Received from Pollution Is Less Than