Given the General Agreement That Pollution Is Undesirable and Social

question 91

Multiple Choice

Given the general agreement that pollution is undesirable and social welfare is increased by reducing pollution, the optimal level of pollution in a society is:

• A)zero.
• B)the level that reduces the marginal social costs of pollution to zero.
• C)the level of pollution at which the marginal social cost of pollution is equal to the marginal social benefit of pollution.
• D)the level of pollution that minimizes the average total cost of producing the product that generates the pollution.

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Definitions:

Cash Discount

An incentive offered by sellers to purchasers for paying an invoice promptly, usually defined as a percentage reduction in the invoice amount.

EOQ Model

Economic Order Quantity model; an inventory management method used to determine the optimum order quantity that minimizes the total inventory holding costs and ordering costs.

Shortage Costs

Costs that fall with increases in the level of investment in current assets.

Carrying Costs

Expenses incurred for holding inventory, including storage, insurance, and handling costs.