Figure 15.8 Consider a chemical plant that discharges toxic waste into a nearby waterway.To reduce the emissions of toxic waste, the firm can install pollution abatement devices.Figure 15.8 shows the marginal benefit and the marginal cost from reduction the toxic waste emissions.
-Refer to Figure 15.8.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 15.8  Consider a chemical plant that discharges toxic waste into a nearby waterway.To reduce the emissions of toxic waste, the firm can install pollution abatement devices.Figure 15.8 shows the marginal benefit and the marginal cost from reduction the toxic waste emissions.
-Refer to Figure 15.8.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, the marginal benefit of reducing emissions by an additional 1 million tons is greater than the marginal cost. Therefore, society should undertake to reduce an additional 1 million tons to achieve a total reduction of 9 million tons. The net benefit would be the area between MB and MC curves up to the point where the reduction target is met, which is larger than the area B + C. Option A is incorrect because the net benefit is positive. Option C is incorrect because it suggests that toxic waste emissions must be eliminated at any cost, which is not feasible or efficient. Option D is incorrect because it assumes that the firms will pass on additional costs to consumers without considering the possibility of technological innovation or changes in market structure.

Figure 158 Consider a Chemical Plant That Discharges Toxic Waste