Chapter 14, Problem 3SQ

From an economic viewpoint, the optimal amount of pollution

1. a. is zero because all pollution imposes costs on society.
2. b. is that amount firms create when they maximize economic profits by setting their marginal private costs equal to market price.
3. c. is that amount where the marginal social costs of producing a good precisely equals the price of the good.
4. d. Both answers b. and c. are correct.