Use the Following to Answer Questions

question 175

Multiple Choice

Use the following to answer questions :
Figure: Efficiency and Pollution
-(Figure: Efficiency and Pollution) Use Figure: Efficiency and Pollution.Assume that firms are the only beneficiaries of pollution and that costs are borne solely by others in the society.If the government imposed an environmental standard that did NOT allow the quantity of pollution to exceed 30 tonnes,there would be:

• A) a socially optimal quantity of pollution.
• B) too little pollution because its marginal social benefit would exceed its marginal social cost.
• C) too much pollution because its marginal social cost would exceed its marginal social benefit.
• D) too much pollution because any pollution is too much from an economist's perspective.

---

Definitions:

Behavioral Economists

Behavioral economists study how psychological, cognitive, emotional, cultural, and social factors affect economic decisions of individuals and institutions.

Brand Loyalty

The tendency of consumers to continuously purchase the same brand's products over competitors due to preferences, satisfaction, or perceived value.

Monopoly Power

The ability of a single entity to control a significant portion of the market and influence price or output levels.

Status Quo Bias

A cognitive bias that leads individuals to prefer things to remain the same or maintain their current state over pursuing change.