-The Social Cost of Pollution Equals 4P,where P Is the Level

question 46

Multiple Choice

-The social cost of pollution equals 4P,where P is the level of pollution,and the cost of pollution control equals 10 - 1P.What is the optimal level of pollution?

• A) 0
• B) 1
• C) 2
• D) 4
• E) 10

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Definitions:

Benefits-Received Principle

The concept that those who benefit from government services should pay taxes in proportion to the amount of benefits they receive.

Corporate Income Taxes

Taxes imposed on the net income of corporations, calculated after deductions for costs, depreciation, and interest.

Elasticity

A general concept measuring the responsiveness of one variable to changes in another variable.

Efficiency Loss

The loss of economic efficiency that can occur when the equilibrium for a good or a service is not achieved or is not achievable.