The socially optimal amount of pollution abatement occurs where society's marginal
A) beneﬁt of abatement exceeds its marginal cost of abatement by the greatest amount.
B) beneﬁt of abatement equals its marginal cost of abatement.
C) beneﬁt of abatement is zero.
D) cost of abatement is at its maximum.

Question

Quizplus · Accepted Answer

The socially optimal amount of pollution abatement occurs where society's marginal benefit of abatement equals its marginal cost of abatement. This is because at this point, the costs of abatement are equal to the benefits, maximizing the net social benefit of abatement. If the marginal benefit exceeds the marginal cost, there is potential for additional abatement to increase social welfare. However, if the cost of abatement is greater than the benefit, the resources used for abatement could be put to better use elsewhere. Therefore, the socially optimal amount of pollution abatement occurs where the marginal benefit equals the marginal cost.

The Socially Optimal Amount of Pollution Abatement Occurs Where Society's