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Chapter 31: 31. Environmental Economics (page 692)

Consider the diagram below, which displays the marginal cost and marginal benefit of water pollution abatement in a particular city, and answer the following questions.

a. What is the optimal percentage degree of water cleanliness?

b. When the optimal percentage degree of water cleanliness has been attained, what cost will be incurred for the last unit of water cleanup?

Short Answer

Expert verified

As a result of a and b, we conclude the optimal percentage

Step by step solution

01

Envirornment economics- Introduction

(a) When marginal gain equals marginal cost, the ideal degree of water contamination is estimated. The figure below depicts the marginal cost and marginal benefit of reducing water pollution in a specific city.

At the level where 65 percent of water is cleansed, marginal revenue matches marginal cost, as seen in the graph above. As a result, the ideal percentage of pure water is 65 percent.

02

Environment economics

b. As a result of additional benefits, the marginal benefit shifts. The effect of increased marginal benefit and lower marginal cost is depicted in the graph below.

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Examine the following marginal costs and marginal benefits associated with water cleanliness in a given locale:

a. What is the optimal degree of water cleanliness?

b. What is the optimal degree of water pollution?

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