Figure 5-7 -Refer to Figure 5-7.Which of the Following Statements Is True

question 46

Multiple Choice

Figure 5-7

-Refer to Figure 5-7.Which of the following statements is true?

• A)At QE the benefits of reducing pollution outweigh the cost of pollution reduction.
• B)At QB society is under allocating resources to pollution reduction.
• C)The optimal quantity of pollution reduction is QB.
• D)The optimal quantity of pollution reduction is QE.

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Definitions:

Emissions Tax

A tax imposed on the emission of pollutants, aimed at reducing environmental harm.

Optimal Tax

A tax system designed to achieve the best balance between efficiency and equity.

Marginal Social Benefit

The supplementary gain for society derived from the consumption of one extra unit of a good or service.

Marginal Social Cost

The cost to society of producing an additional unit of a good or service, including both private costs and any externalities.