Consider the following benefit and cost functions for the abatement level (A) necessary to achieve the maximum
Question:
Consider the following benefit and cost functions for the abatement level (A) necessary to achieve the maximum contaminant level (MCL) for some identified drinking water pollutant.
TSB = 45A − 0.25A2
MSB = 45 −0.5A
TSC = 24A + 0.10A2
MSC = 24 + 0.2A,
where all benefit and cost values are measured in millions of dollars and A is measured in percent.
a. Using the pre-1996 benefit-based criterion for drinking water standards, find the level of abatement that will maximize total social benefits (TSB).
b. Based on the benefit-cost criterion in the 1996 SDWA, find the maximum level of abatement that will ensure positive net benefits.
c. What level of abatement will maximize the net social benefits?
Step by Step Answer:
Environmental Economics and Management Theory, Policy and Applications
ISBN: 978-1111826673
6th edition
Authors: Scott J. Callan, Janet M. Thomas