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Figure: Pollution and Efficiency
-(Figure: Pollution and Efficiency)Use Figure: Pollution and Efficiency.In this market,in which sulphur emissions are a result of production,if _____ units of emissions are produced,then _____.
A) 40;MSB = MSC
B) 30;MSB

Question

Use the following to answer questions :
Figure: Pollution and Efficiency 
-(Figure: Pollution and Efficiency)Use Figure: Pollution and Efficiency.In this market,in which sulphur emissions are a result of production,if _____ units of emissions are produced,then _____.
A) 40;MSB = MSC 
B) 30;MSB < MSC 
C) 40;MSB < MSC 
D) 30;MSC < MSB

Quizplus · Accepted Answer

According to the figure, at 40 units of emissions (point B), MSB is equal to MPC while MSC is above that level. This implies that the marginal social benefit (MSB) of producing an additional unit of output is lower than the marginal social cost (MSC) of an additional unit of pollution. Therefore, producing at this level would reduce social welfare, and the optimal level of emissions would be lower.

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