If the marginal benefit received from pollution is less than its marginal cost, then:
A) the market is producing an efficient quantity of pollution.
B) society's well-being cannot be improved by changing the quantity of pollution.
C) the market is producing too much pollution.
D) the market is producing too little pollution.

Question

Quizplus · Accepted Answer

This is because marginal benefit is the additional benefit derived from an increase in pollution and marginal cost is the additional cost of producing that extra pollution. If the marginal benefit is less than the marginal cost, it means that the cost of producing that extra pollution outweighs the benefits derived from it. Therefore, the market is producing too much pollution and should reduce the quantity of pollution to reach an efficient level.

If the Marginal Benefit Received from Pollution Is Less Than