Economic Analysis of the Optimal Amount of Pollution Is Typically

question 39

Multiple Choice

Economic analysis of the optimal amount of pollution is typically done in terms of the amount of pollution
Abated, as opposed to the amount of pollution produced. Why?

• A) Because it is more practical to measure the marginal costs of pollution abated than of pollution produced.
• B) Because governments and environmental authorities can produce more reliable data on pollution abated than pollution produced, which facilitates the economic analysis.
• C) Because the abatement of pollution is a ʺgoodʺ to which we can more easily apply the concepts of supply and demand.
• D) Because there are no marginal benefits of pollution produced, so it is necessary to study pollution abated in order to equate marginal benefits and marginal costs.
• E) All of the above are correct.

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