11. Critique the following: \"The graph below shows why economics is dangerous f
ID: 1142537 • Letter: 1
Question
11. Critique the following: "The graph below shows why economics is dangerous for the planet. It suggests that the level of pollution reduction P*, where its marginal cost is just equal to its marginal benefit to society, is preferable to a 100% reduction in pollution (i.e., total elimination of all pollution). But that's absurd. Everyone knows there's no efficient' level of pollution, and that getting rid of all pollution is better for everyone than letting some pollution continue unabated." Marginal cost of pollution reduction MC Marginal benefit of pollution reduction MC MB MB 0 P* 100% Reduction in pollutionExplanation / Answer
Yes it is true that pollution of every level whether below or above MB = MC is harmful. But considering the need for development, production processes it is inevitable, and not practical, feasible, efficient or effective. We still do not have the required technology and resources to produce everything in a sustainable manner.
From an economic consideration, the socially optimal level of pollution occurs when the marginal benefit of the last unit of pollution exactly equals the marginal cost of pollution. At this level, the net benefits to society are maximized. If all of the externalities of pollution are accounted for, the final level of pollution will be optimal and sustainable too.
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