Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
Textbook Question
Chapter 12, Problem 10SCQ

Suppose a city releases 16 million gallons of raw sewage into a nearby lake. Table 12.8 shows the total costs of cleaning up the sewage to different levels, together with the total benefits of doing so. (Benefits include environmental, recreational, health, and industrial benefits.)

1. Using the information in Table 12.8, calculate the marginal costs and marginal benefits of reducing sewage emissions for this city. See Production, Costs and Industry Structure if you need a refresher on how to calculate marginal costs.
2. What is the optimal level of sewage for this city?
3. Why not just pass a law that films can emit zero sewage? After all, the total benefits of zero emissions exceed the total costs.

Students have asked these similar questions
A city currently emits 16 million gallons (MG) of raw sewage into a lake that is beside the city. The table below 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. Emissions Total Cost Marginal Cost Total Benefit Marginal Benefit 16 MG Current N/A Current N/A 12 MG 50   800   8 MG 150   1300   4 MG 500   1650   0 MG 1200   1950   Complete the table. What is the optimal level of sewage for this city? How can you tell?
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