The Optimal Level of Pollution Is

question 45

Multiple Choice

The optimal level of pollution is:

• A) the level at which the marginal social cost of air quality equals the marginal social benefit.
• B) the level at which the average social cost of air quality equals the average social benefit.
• C) the level at which the total social cost of air quality equals the total social benefit.
• D) zero.

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Definitions:

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay, indicating economic benefit.

Tax

Compulsory financial charges or other types of levies imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.

Producer Surplus

The difference between what producers are willing to accept for a good or service and the higher price they actually receive, representing the benefit to producers.

Tax

A tax represents an obligatory monetary fee or different kind of charge applied to a taxpayer by a government entity, intended to finance government operations and a range of public spending.