Figure 5-4 Consider a chemical plant that discharges toxic fumes over a nearby community.To reduce the emissions of toxic fumes the firm can install pollution abatement devices.Figure 5-4 shows the marginal benefit and the marginal cost from reducing the toxic fumes emissions.
-Refer to Figure 5-4.Suppose the emissions reduction target is currently established at 8 million tons.Should society undertake to reduce an additional 1 million tons so that the total reduction is 9 million tons?

Question

Figure 5-4  Consider a chemical plant that discharges toxic fumes over a nearby community.To reduce the emissions of toxic fumes the firm can install pollution abatement devices.Figure 5-4 shows the marginal benefit and the marginal cost from reducing the toxic fumes emissions.
-Refer to Figure 5-4.Suppose the emissions reduction target is currently established at 8 million tons.Should society undertake to reduce an additional 1 million tons so that the total reduction is 9 million tons?

Quizplus · Accepted Answer

According to the graph, at 9 million tons reduction, the marginal benefit is greater than the marginal cost. Therefore, society should undertake to reduce an additional 1 million tons. Option A is incorrect because the marginal benefit is greater than the marginal cost. Option C is incorrect because it is not practical to eliminate toxic fumes at any cost. Option D is also incorrect because it is not mentioned in the graph that firms will pass on additional costs to consumers.

Figure 5-4 Consider a Chemical Plant That Discharges Toxic