Question
1a) Does it make sense to attempt to eliminate all pollution, or is there an optimal amount of pollution?Explain. 1b) Suppose a city releases 16
1a) Does it make sense to attempt to eliminateallpollution, or is there an "optimal" amount of pollution?Explain.
1b) Suppose a city releases 16 million gallons of raw sewage into a nearby lake. The table below 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.)
Total Cost
(thousandsof dollars)
Total Benefits
(thousandsof dollars)
16 million gallons
Current situation
Current situation
12 million gallons
50
800
8 million
150
1300
4 million gallons
500
1850
0 gallons
1200
2000
Using the information in the table, calculate the marginal costs and marginal benefits of reducing sewage emissions for this city. {See Cost and Industry Structure if you need a refresher on how to calculate marginal costs.}
*What is the optimal level of sewage for this city?
*Why not just pass a law that zero sewage can be emitted? After all, the total benefits of zero emissions exceed the total costs.
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Auditing Cases An Active Learning Approach
Authors: Mark S. Beasley, Frank A. Buckless, Steven M. Glover, Douglas F. Prawitt
2nd Edition
0130674842, 978-0130674845
