The Marginal External Cost Per Unit of Effluent Discharged into a River

question 8

Multiple Choice

The marginal external cost per unit of effluent discharged into a river by a perfectly competitive chemical industry is currently estimated to be $50 per ton per year.Which of the following state?ments is true?

• A)Efficiency can be achieved with a $50 per ton annual effluent charge.
• B)At the competitive equilibrium output, the marginal social benefit of discharging effluent is $50.
• C)Efficiency can be achieved by banning discharge of effluent.
• D)At the efficient output, the marginal social benefit of discharging effluent will be zero.

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