Suppose the A&G Fuel Company wants to build three pipelines that would carry fuels under your city. The pipelines pose risks of groundwater contamination and explosion. For each pipeline the tablebelow shows the marginal benefit to A&G Fuel Company and the marginal cost of expected damages to residents (in millions of dollars).Marginal Cost(added damages)PipelinesTotal ProfitsMarginal Benefitfor A&G FuelTotal Damage toResidentsCompany11205528075370125a. Fill in the blanks in the table. What is the efficient number of pipelines?b. Suppose that A&G Fuel Company has the right to build the pipelines. What is the range of offers (in millions of dollars) that the residents might make and A&G Fuel Company might accept toeliminate the third pipeline? Betweenand(Show all the calculations)c. If residents have the right to clean environment, at the level of output selected by A&G Fuel Company, what is the total amount of compensation A&G Fuel Company will provide to the residents?(Show all the calculations)

Pipelines Total Profit Total Damage Marginal Benefit Marginal Cost 0 0 0 0 0 1 120 55 120 55…

Suppose the A&G Fuel Company wants to build three pipelines that would carry fuels under your city. The pipelines pose risks of groundwater contamination and explosion. For each pipeline the table below shows the murginal benefit to A&G Fuel Company and the marginal cost of expected damnges to residents (in millions of dollars). Pipelines Total Damage to Residents Marginal Benefit Marginal Cost (added damages) Total Profits for A&G Fuel Company 1 120 55 80 75 70 125 a. Fill in the blanks in the table. What is the efficient mumber of pipelines? b. Suppose that A&G Fuel Company has the right to build the pipelines. What is the range of offers (in millions of dollars) that the residents might make and A&G Fuel Company might accept to eliminate the third pipeline? Between and (Show all the calculations) c. If residents have the right to clean environument, at the level of output selected by A&G Fuel Company, what is the total amount of compensation A&G Fuel Company will provide to the residents? (Show all the calculations)

Suppose the A&G Fuel Company wants to build three pipelines that would carry fuels under your city. The pipelines pose risks of groundwater contamination and explosion. For each pipeline the table below shows the murginal benefit to A&G Fuel Company and the marginal cost of expected damnges to residents (in millions of dollars). Pipelines Total Damage to Residents Marginal Benefit Marginal Cost (added damages) Total Profits for A&G Fuel Company 1 120 55 80 75 70 125 a. Fill in the blanks in the table. What is the efficient mumber of pipelines? b. Suppose that A&G Fuel Company has the right to build the pipelines. What is the range of offers (in millions of dollars) that the residents might make and A&G Fuel Company might accept to eliminate the third pipeline? Between and (Show all the calculations) c. If residents have the right to clean environument, at the level of output selected by A&G Fuel Company, what is the total amount of compensation A&G Fuel Company will provide to the residents? (Show all the calculations)

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter12: Environmental Protection And Negative Externalities

Section: Chapter Questions

Problem 10SCQ: Suppose a city releases 16 million gallons of raw sewage into a nearby lake. Table 12.8 shows the...

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