Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 31: Q. 5 (page 707)

Consider the diagram below and respond to the questions that follow.

a. Assume that a new technique for decreasing water pollution lowers the marginal cost of pollution reduction at every level of water cleanliness. Will the ideal % degree of water cleanliness rise or decline after this event? Will the cost of the final unit of water cleanup grow or decrease? Include a visual to help you explain your point.

b. Assume that the event described in item (a) occurs, and that medical studies show that the marginal benefit from reducing water pollution is higher at all levels of water purity. Will the ideal % degree of water cleanliness rise or decrease after both events? Can you predict whether the cost of the last unit of water cleanup will increase or decrease as compared to the initial optimum? To help you clarify your answers, create a new diagram.

Short Answer

Expert verified

After the event occurs the degree of water cleanliness fall and increases in the unit of water.

Step by step solution

01

introduction

The marginal cost of pollution abatement will be reduced as new technology is installed.

a.

The graph below shows how a decrease in marginal cost raises the degree of cleanliness while lowering the cost of the previous cleanup:

Graph1.1

As seen in the graph 1.1, a decrease in the marginal cost resulted in an increase in the degree of cleanliness (as represented by QandQ* ) and a decrease in the cost of the last clean up (indicated by CandC* ).

02

 the effect of increased marginal benefit and decreased marginal cost

b.Because of the higher benefits, the marginal benefit shifts. The effect of increased marginal benefit and lower marginal cost is illustrated in the graph below:

Graph1.2

Because of the enhanced benefit and lower cost, the level of cleanliness will improve. The cost of pollution reduction could rise or fall.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

The table below shows the estimated annual total costs and benefits of maintaining Asian elephant populations in their natural habitat.

The market price of insecticide is initially \(10per unit. To address a negative externality in this market, the government decides to charge producers of insecticide for the privilege of polluting during the production process. A fee that fully takes into account the social costs of pollution is determined, and once it is pat into effect, the market supply curve for insecticide shifts upward by \)4 per unit. The market price of insecticide also increases, to $12 per unit. What fee is the government charging insecticide manufacturers?

One possible method for reducing emissions of greenhouse gases such as carbon dioxide is to inject the gases into deep saltwater-laden rock formations, where they would be trapped for thousands of years. Suppose that the federal government provides a fixed per-unit subsidy to firms that utilize this technology in West Virginia and other locales where such rock formations are known to exist.

a. Consider the effects of the government subsidy on the production and sale of equipment that injects greenhouse gases into underground rock formations. What happens to the market clearing price of such pollution abatement equipment?

b. Who pays to achieve the results discussed in part (a)?

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?

c. Suppose that a company creates a food additive that offsets most of the harmful effects of drinking polluted water. As a result, the marginal benefit of water cleanliness declines by $40,000at each degree of water cleanliness at or less than 80 percent. What is the optimal degree of water cleanliness after this change?

The following table gives hypothetical annual total costs and total benefits of maintaining alternative populations of Asian elephants.

a. Calculate the marginal costs and benefits, and draw marginal benefit and cost schedules.

b. Given the data, what is the socially optimal world population of Asian elephants?

c. Suppose that two events occur simultaneously. Technological development allows machines to do more efficiently much of the work that elephants once did, which reduces by \(10million the marginal benefit of maintaining the elephant population for each 7,500increment in the elephant population. In addition, new techniques for breeding, feeding, and protecting elephants reduce the marginal cost by \)40million for each 7,500increment in the elephant population. What is the new socially optimal population of Asian elephants?
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free