1. Suppose marginal cost of abating X units of pollution is given by: MC(X) = 2X and marginal benefits are MB(X) = 16-2x when X<= 3 and 10 when X > 3. Current pollution = 6.
a.) What is the optimal level of pollution abatement, X*? How much pollution is there when X = X*?
COMMENT: For this part I set 2x = 16-2x and got 4 but 4>3 so I don't think that's a valid solution. So I set 2x = 10 when X >3 and got 5, what's the correct approach?
b.) What are total costs, marginal costs, and total net benefits at X = X*?
c.) What is the total net benefit of making (and encofring) a rule that bans pollution completely? What is the marginal benefit from removing the last little bit of pollution (i.e. the marginal benefit around the point X = Xmax)
d.) Suppose air pollution abatement in the U.S. is currently X* (that is, we currently have the ideal amount of air pollution given the costs and benefits of abatement). Now suppose that an effective vaccine against asthma is invented and given to everyone. Would this increase or decrease X*? Come up with your own example of a new technology that would move X* in the opposite direction and explain why it would have this effect.
Poster below me asked for irrelevant information that is not needed to answer the question.
1. Suppose marginal cost of abating X units of pollution is given by: MC(X) = 2X and marginal benefits are MB(X) = 16-2x when X<= 3 and 10 when X > 3. Current pollution = 6.
a.) What is the optimal level of pollution abatement, X*? How much pollution is there when X = X*?
COMMENT: For this part I set 2x = 16-2x and got 4 but 4>3 so I don't think that's a valid solution. So I set 2x = 10 when X >3 and got 5, what's the correct approach?
b.) What are total costs, marginal costs, and total net benefits at X = X*?
c.) What is the total net benefit of making (and encofring) a rule that bans pollution completely? What is the marginal benefit from removing the last little bit of pollution (i.e. the marginal benefit around the point X = Xmax)
d.) Suppose air pollution abatement in the U.S. is currently X* (that is, we currently have the ideal amount of air pollution given the costs and benefits of abatement). Now suppose that an effective vaccine against asthma is invented and given to everyone. Would this increase or decrease X*? Come up with your own example of a new technology that would move X* in the opposite direction and explain why it would have this effect.
Poster below me asked for irrelevant information that is not needed to answer the question.
Related textbook solutions
Related questions
Examine the following marginal costs and marginal benefits associated with air cleanliness in a given locale:
|
Quantity of clean air % |
Marginal cost $ |
Marginal benefit $ |
|
0 |
50,000 |
600,000 |
|
20 |
150,000 |
360,000 |
|
40 |
200,000 |
200,000 |
|
60 |
300,000 |
150,000 |
|
80 |
400,000 |
120,000 |
|
100 |
infinite |
0 |
a. How do we determine the optimal quantity of clean air?
b. What is the optimal degree of air cleanliness for this example?
c. What is the optimal degree of air pollution for this example?
d. Suppose that a state provides subsidies for a company to build i. plants that contribute to air pollution. Cleaning up this pollution causes the marginal cost of air cleanliness to rise by $210,000 at each degree of air cleanliness. What is the optimal degree of air cleanliness after this change?
e. Why would we not just want the per cent of pollution to be zero?
