Suppose that the costs and benefits of achieving water quality in New York are modeled as shown below. Use these relationships for any or all of questions .
MSB = 80 - 2A MSC = 20 + 2A
TSB = 80A - A 2 TSC = 20A + A 2 ,
where A is the abatement level for conventional pollutants.
-Compared to the efficient level of abatement, the benefit-based abatement standard
A) is twice as large in this case
B) uses fewer resources
C) is associated with higher water quality
D) is more cost-effective

Question

Quizplus · Accepted Answer

The efficient level of abatement is found where MSB = MSC. Setting 80 - 2A = 20 + 2A gives 60 = 4A, so A = 15. A benefit-based abatement standard focuses on maximizing benefits, which would lead to higher water quality compared to a standard that does not specifically aim to maximize benefits.

Suppose That the Costs and Benefits of Achieving Water Quality