If the marginal benefit received from pollution is greater than its marginal cost, then:
A) society's well-being can be improved if the quantity of pollution decreases.
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

When the marginal benefit of pollution (the additional benefit received from producing one more unit of pollution) is greater than its marginal cost (the additional cost incurred from producing one more unit of pollution), it indicates that the current level of pollution is too low. Increasing pollution in this scenario would bring more benefits than costs, suggesting that the market is producing too little pollution for optimal social welfare.

If the Marginal Benefit Received from Pollution Is Greater Than