In terms of cost-benefit analysis, explain why a competitive market with an externality produces too much pollution
What will be an ideal response?
At the socially optimal level of production, welfare is maximized and the marginal benefit from less pollution equals the marginal cost of less output. However, a competitive market with an externality produces more pollution than is socially optimal, and the marginal cost of less output is greater than the marginal benefit from less pollution.
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Between 2006 and 2008 the poverty rate
A. rose by about one percent. B. fell by about one percent. C. rose by around three percent. D. fell by about three percent.
A pollution tax has the effect of reducing the costs of production for a firm, leading to a rightward shift of the supply curve
a. True b. False Indicate whether the statement is true or false
Government expenditures are larger than government outlays
a. True b. False
Which of the following would be most likely to push stock prices higher?
a. higher interest rates and the expectation of larger future corporate profits b. higher interest rates and the expectation of smaller future corporate profits c. lower interest rates and the expectation of larger future corporate profits d. lower interest rates and the expectation of smaller future corporate profits