Use the Following to Answer Question

question 186

Multiple Choice

Use the following to answer question:
Figure: MSB and MSC of Pollution
-(Figure: MSB and MSC of Pollution) Use Figure: MSB and MSC of Pollution.Assume that firms are the only beneficiaries of pollution and that costs are borne solely by others in the society.What level of pollution represents the socially optimal level?

• A)Q₁
• B)Q₂
• C)Q₃
• D)Q₄

---

Definitions:

Big Mac Index

An informal measure of purchasing power parity between two currencies, calculated by comparing the price of a McDonald's Big Mac burger in different countries.

Purchasing Power Parity

An economic theory that compares different countries' currencies through a "basket of goods" approach, adjusting for the cost of living and inflation rates to determine relative currency values.

Exchange Rates

The value of one currency for the purpose of conversion to another.

Real Income

The income of an individual or group after adjusting for inflation, representing the actual purchasing power.