The Efficient Amount of Pollution in Society

question 53

Multiple Choice

The efficient amount of pollution in society:

• A)is zero.
• B)occurs when the detriment to society from every unit of pollution emitted is taken into account appropriately and remedies are created such that the supply curve for each industry is fully reflective of all marginal social costs.
• C)is impossible to calculate and therefore it is probably better to set maximum limits for pollution output for each firm in industries that pollute in proportion to their profits.
• D)is achieved without the government setting any emissions standards because the market equilibrium will coincide with the social optimum in the absence of intervention.

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Definitions:

Aggregate Spending

The total spending on goods and services in an economy at a given overall price level and in a given time period.

Marginal Propensity

The ratio of change in an economic variable, such as consumption or saving, to a change in another, like income.

Consumption Spending

The total amount of money spent by households and consumers on durable goods, nondurable goods, and services.

Income

Money received, especially on a regular basis, by an individual or business in exchange for providing labor, goods, or services, or through investing.