Figure: The Socially Optimal Quantity of Pollution (Figure: The Socially Optimal Quantity of Pollution) In the figure The Socially Optimal Quantity of Pollution, the optimal level of pollution is:
A)zero, since no pollution is best for society.
B)where the marginal social benefit curve intersects the quantity axis.
C)where the marginal social cost curve intersects the quantity axis.
D)where the marginal social benefit curve intersects the marginal social cost curve.

Question

Figure: The Socially Optimal Quantity of Pollution   (Figure: The Socially Optimal Quantity of Pollution) In the figure The Socially Optimal Quantity of Pollution, the optimal level of pollution is:
A)zero, since no pollution is best for society. 
B)where the marginal social benefit curve intersects the quantity axis. 
C)where the marginal social cost curve intersects the quantity axis. 
D)where the marginal social benefit curve intersects the marginal social cost curve.

Quizplus · Accepted Answer

The socially optimal quantity of pollution is where the marginal social benefit (MSB) equals the marginal social cost (MSC). This occurs at point E, where the MSB curve intersects the MSC curve. At this point, the costs to society of reducing pollution further (MSC) are equal to the benefits to society of reducing pollution further (MSB), resulting in the optimal level of pollution being produced.

Figure: the Socially Optimal Quantity of Pollution (Figure