Use the following to answer question(s): Efficiency and Pollution

-(Exhibit: Efficiency and Pollution) A situation where there is too much pollution in this market may be illustrated when the price is _______ and the quantity is _______ .
A) $5; 15
B) $5; 40
C) $25; 20
D) $5; 30

Question

Use the following to answer question(s): Efficiency and Pollution
 
-(Exhibit: Efficiency and Pollution) A situation where there is too much pollution in this market may be illustrated when the price is _______ and the quantity is _______ .
A) $5; 15 
B) $5; 40 
C) $25; 20 
D) $5; 30

Quizplus · Accepted Answer

In the exhibit, the point where the marginal social cost (MSC) intersects with the demand curve represents the socially optimal level of production. If the market produces at a higher quantity than this, there is too much pollution. At a price of $5 and a quantity of 40, the quantity produced is above the socially optimal level and the pollution is too high. Therefore, the correct choice is B.

Use the Following to Answer Question(s): Efficiency and Pollution