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Figure: Efficiency and Pollution
-(Figure: Efficiency and Pollution)Use Figure: Efficiency and Pollution.Assume that firms are the only beneficiaries of pollution and that costs are borne solely by others in the society.The socially optimal quantity of pollution is _____ tonnes.
A) 0
B) 20
C) 30
D) 45

Question

Use the following to answer questions :
Figure: Efficiency and Pollution 
-(Figure: Efficiency and Pollution)Use Figure: Efficiency and Pollution.Assume that firms are the only beneficiaries of pollution and that costs are borne solely by others in the society.The socially optimal quantity of pollution is _____ tonnes.
A) 0 
B) 20 
C) 30 
D) 45

Quizplus · Accepted Answer

The socially optimal quantity of pollution is where the marginal cost of abatement equals the marginal social benefit of pollution reduction, which occurs at point Q where the cost of pollution abatement is 30 tonnes. At this level, the cost of abatement is equal to the benefit from reducing pollution, which is the cost borne by society due to pollution. Therefore, the socially optimal quantity of pollution is 30 tonnes.

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