The table below shows the marginal costs and marginal benefits associated with cleaning up a polluted landfill site.
TABLE 17-2
-Refer to Table 17-2.Would it be socially optimal to achieve 100% cleanliness of this landfill site?

Question

The table below shows the marginal costs and marginal benefits associated with cleaning up a polluted landfill site.
  TABLE 17-2
-Refer to Table 17-2.Would it be socially optimal to achieve 100% cleanliness of this landfill site?

Quizplus · Accepted Answer

The socially optimal outcome occurs where marginal cost equals marginal benefit. In this case, the marginal cost of achieving 100% cleanliness is $8.0 million, while the marginal benefit is $4.0 million. Therefore, the net benefit to society at that level is not maximized, and it would not be socially optimal to achieve 100% cleanliness. Option A is incorrect because there may be other socially optimal outcomes that are not 100% cleanliness. Option B is incorrect because there is no information provided about the availability of technology. Option D is incorrect because it assumes a positive net benefit, which is not the case for 100% cleanliness. Option E is incorrect because the marginal benefit alone is not sufficient to determine the socially optimal outcome.

The Table Below Shows the Marginal Costs and Marginal Benefits