As an economist, how would you respond to the following statement "There is no such thing as an acceptable level of pollution"?
A. I would disagree with this statement because the market is able to allocate sufficient resources to reducing pollution to an acceptable level. Externalities are taken into account by those making market choices.
B. I would disagree with this statement because although reducing pollution
has benefits, doing so also has a cost. The optimal level of pollution is where the marginal benefit of reducing pollution just equals the marginal cost.
C. I would agree with this statement because western countries have sufficient monetary resources to invest in pollution-reducing equipment. Further, people can change their consumer choices to eliminate pollution.
D. I would agree with this statement because the word acceptable reflects a person's preferences, which are not accounted for in a market with externalities such as pollution.
|image from wikipedia|
So yes, the answer is there is an efficient level of pollution, the answer isn't to clean everything up, that would be expensive and absolutely nothing would ever be produced!