Figure: Efficiency and Pollution (Figure: Efficiency and Pollution) Look at the figure Efficiency and Pollution.If the government imposed an environmental standard that did not allow the quantity of pollution to exceed 40 tons, there would be:
A)a socially optimal quantity of pollution.
B)too little pollution, because the marginal social benefit of pollution would exceed the marginal social cost of pollution.
C)too much pollution, because the marginal social cost of pollution would exceed the marginal social benefit of pollution.
D)too much pollution, because any pollution is too much from an economist's perspective.

Question

Figure: Efficiency and Pollution   (Figure: Efficiency and Pollution) Look at the figure Efficiency and Pollution.If the government imposed an environmental standard that did not allow the quantity of pollution to exceed 40 tons, there would be:
A)a socially optimal quantity of pollution. 
B)too little pollution, because the marginal social benefit of pollution would exceed the marginal social cost of pollution. 
C)too much pollution, because the marginal social cost of pollution would exceed the marginal social benefit of pollution. 
D)too much pollution, because any pollution is too much from an economist's perspective.

Quizplus · Accepted Answer

At the point where the marginal social cost (MSC) intersects with the demand curve, the equilibrium quantity of pollution is 60 tons. However, if the government imposes an environmental standard that does not allow the quantity of pollution to exceed 40 tons, the new equilibrium point would be where the MSC curve intersects with the supply curve at a quantity of 40 tons. At this point, the marginal social cost of pollution exceeds the marginal social benefit, indicating that there is too much pollution. Therefore, choice C is the best answer.