1.3 Consider the following table of costs and benefits from a governmental policy to clean the water in a local area.

a What level of abatement is most efficient by general economic criteria?

b Would a 70% level of abatement pass a cost– benefit test? Is it efficient?

c How would you respond to those who argue for 100% abatement?

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Level of Abatement (%) Total Costs ($) Total Benefits ($) 0 10 0 0 10 80 20 22 150 30 40 200 40 70 240 50 105 280 60 150 320 70 210 350 80 280 375 90 350 385 100 420 390