In the presence of pollution, social welfare is maximized by ...

[TFauchery]

In the presence of pollution, social welfare is maximized by
 
  A) reducing output and pollution until marginal benefit of less pollution is equal to the marginal cost of less output.
  B) reducing output and pollution until the benefit curve (of less pollution) and cost curve (of less output) intersect.
  C) reducing output and pollution until the benefits of pollution reduction just cover the costs of output reduction.
  D) None of the above.

Question 2

Short-run costs are never equal or lower than long-run cost.
 
  Indicate whether the statement is true or false

[shailee]

Answer to Question 1

A

Answer to Question 2

False. Since the long-run curve envelopes all short-run curves there is always a level of output where short-run cost are equal to long-run cost. However, short-run cost can never be lower than long-run cost.

[TFauchery]

Thank you

[shailee]

Happy to help you