3. A city currently emits 16 million gallons (MG) of raw sewage into a lake that is beside the city. The following table shows the total costs (TC) in thousands of dollars of cleaning up the sewage to different levels, together with the total benefits (TB) of doing so. Benefits include environmental, recreational, health, and industrial benefits. TC TB 16 MG Current Current 12 MG 50 800 8 MG 150 1300 4 MG 500 1850 O MG 1200 2000 a. Using the information in the table, calculate the marginal costs and marginal benefits of reducing sewage emissions for this city. b. What is the optimal level of sewage for this city? How can you tell?

3. A city currently emits 16 million gallons (MG) of raw sewage into a lake that is beside the city. The following table shows the total costs (TC) in thousands of dollars of cleaning up the sewage to different levels, together with the total benefits (TB) of doing so. Benefits include environmental, recreational, health, and industrial benefits. TC TB 16 MG Current Current 12 MG 50 800 8 MG 150 1300 4 MG 500 1850 O MG 1200 2000 a. Using the information in the table, calculate the marginal costs and marginal benefits of reducing sewage emissions for this city. b. What is the optimal level of sewage for this city? How can you tell?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter4: Utility Maximization And Choice

Section: Chapter Questions

Problem 4.3P

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