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agoldberg2011 agoldberg2011
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A year ago
Suppose a farm that is polluting an underground water supply faces the following marginal costs for abating units of pollution:
1st unit abated, MC = $250
2nd unit abated, MC = $400
3rd unit abated, MC = $650
4th unit abated, MC = $950

The marginal benefit to society from this farm abating units of pollution are as follows:
1st unit abated, MB = $1000
2nd unit abated, MB = $800
3rd unit abated, MB = $650
4th unit abated, MB = $300

Why would it not be optimal for this farmer to abate four units of pollution?

▸ because it is not productively efficient

▸ because the total net benefit of abating the 4th unit is greater than the total cost

▸ because abating the 4th unit adds more to social costs than to social benefits

▸ because the total cost of abating 4 units is greater than the total benefits

▸ because the farmer has no way to charge a price for the units of pollution abated
Textbook 
Microeconomics

Microeconomics


Edition: 17th
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ricyoungricyoung
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A year ago
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agoldberg2011 Author
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A year ago
this is exactly what I needed
sadiewolf
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Yesterday
Helped a lot
avance37
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2 hours ago
Thank you, thank you, thank you!
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