At What Point Does the Optimal Level of Pollution Abatement

question 42

Multiple Choice

At what point does the optimal level of pollution abatement in the steel industry occur?

• A) where the total cost of abatement is equal to the total benefit from abatement
• B) where the marginal social cost of producing steel is equal to the demand for steel
• C) where the marginal social cost of abatement is equal to the marginal social benefit from abatement
• D) where the marginal private cost of abatement is equal to the marginal social benefit from abatement

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Definitions:

Payback Method

A capital budgeting method that calculates the time needed to recoup the initial investment in a project, based on the project's expected cash flows.

Discounted Cash Flow

A financial analysis method that estimates the value of an investment based on its future cash flows, adjusted for time and risk.

Cash Inflows

Money received by a business from its operations, investments, or financing activities.

Investment Outflows

Money expended on acquiring or investing in assets with the expectation of generating future returns.