Figure 4.4.4
-Refer to Figure 4.4.4 above. The figure shows a family's demand for pollution reduction of nitrogen oxide. What occurs when the pollution authority proposes a reduction of 5 parts per 100 million (pphm) ?
A) The family would receive a surplus of $2500, but since the family is not willing to pay for such an initiative, their consumer surplus and expenditures are zero.
B) The family would spend $1000 to receive 5 pphm of pollution reduction and gain some surplus.
C) The family would make the necessary expenditures to clean up the pollution, but the government would keep the consumer surplus.
D) The family is willing to pay $5000, and receive a value even larger than that, when 5 pphm of nitrogen oxide are cleaned up.
Correct Answer:
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