Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
Textbook Question
Chapter 12, Problem 43P

A city currently emits 15 million gallons (MG) of raw sewage into a lake that is beside the city. Table 12.13 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.

1. Using the information in Table 12.13 calculate the marginal costs and marginal benefits of reducing sewage emissions for this City.
2. What is the optimal level of sewage for this city? How can you tell?

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?
A city currently emits 16 million gallons (MG) of raw sewage into a lake that is beside the city. Table 12.13 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 0 MG 1200 2000 Table 12.13 Using the information in Table 12.13 calculate the marginal costs and marginal benefits of reducing sewage emissions for this city. What is the optimal level of sewage for this city? How can you tell?
Firm A currently dumps 223 tons of chemicals into the local river. Firm B currently dumps 192 tons of chemicals into the local river. The government has decided to reduce the pollution and from now on will require a pollution permit for each ton of pollution dumped into the river. The government gives each firm 10 pollution permits. The abatement costs of one ton of pollution is \$173 for Firm A and \$76 for Firm B. What would be the total cost of reducing pollution, if the firms are allowed to trade permits between each other?
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