The figure below shows the demand and supply curves for pollution abatement. FIGURE 17-3
-Refer to Figure 17-3.What area on the diagram represents the net total benefit of abating pollution by the optimal amount?

Question

The figure below shows the demand and supply curves for pollution abatement.  FIGURE 17-3
-Refer to Figure 17-3.What area on the diagram represents the net total benefit of abating pollution by the optimal amount?

Quizplus · Accepted Answer

The net total benefit of abating pollution by the optimal amount is represented by the area under the MB curve and above the MC curve to the left of Q*. This is because at the optimal level of pollution abatement, the marginal benefit (MB) of abatement is equal to the marginal cost (MC) of abatement, and the total net benefit is the sum of all the individual benefit that exceed the cost of abatement up to that point. Therefore, the optimal level of abatement represents the area where the MB curve intersects the MC curve, and the net total benefit is the area under the MB curve and above the MC curve up to this point.

The Figure Below Shows the Demand and Supply Curves for Pollution