Question

In the absence of government action and if it is costless to pollute for the polluter, polluters will pollute up to the point at which the marginal social benefit of pollution is: equal to the marginal social cost of pollution. zero. maximized. greater than the marginal social cost of pollution. 4. Which statement about environmental standards and emissions taxes is correct? It is easy to set emissions taxes at the ''correct'' level, because the relationship between emissions taxes and the reduction in emissions that they induce has been extensively studied and is well known. An emissions tax is a more efficient way to reduce pollution than an environmental standard, because an emissions tax leads to an equalization of the marginal benefit of pollution from all sources. An environmental standard is a more efficient way to reduce pollution than an emissions tax, because an environmental standard can be structured to lead to an equalization of the reduction in pollution from all sources. If an emissions tax and environmental standards lead to the same total reduction in pollution, then they will also lead to the same reduction in pollution by individual polluters. 5. Given the general agreement that pollution is undesirable and social welfare is increased by reducing pollution, the optimal level of pollution in a society is: zero. the level that reduces the marginal social costs of pollution to zero. the level of pollution at which the marginal social cost of pollution is equal to the marginal social benefit of pollution. the level of pollution that minimizes the average total cost of producing the product that generates the pollution.

Answer 1

3. zero; 4. An emissions tax is a more efficient way to reduce pollution than an environmental standard, because an emissions tax leads to an equalization of the marginal benefit of pollution from all sources; 5. the level of pollution at which the marginal social cost of pollution is equal to the marginal social benefit of pollution.

Step-by-step explanation:

In the absence of government action and if it is costless to pollute for the polluter, polluters will pollute up to the point at which the marginal social benefit of pollution is zero.

The correct statement is: An emissions tax is a more efficient way to reduce pollution than an environmental standard because an emissions tax leads to an equalization of the marginal benefit of pollution from all sources.

Given the general agreement that pollution is undesirable and social welfare is increased by reducing pollution, the optimal level of pollution in a society is the level of pollution at which the marginal social cost of pollution is equal to the marginal social benefit of pollution.