Suppose people value clean air more as their incomes increase, then

Question

Quizplus · Accepted Answer

As people value clean air more with higher incomes, the marginal benefit of pollution abatement increases. This leads to a rightward shift in the marginal benefit curve, indicating that people are willing to pay more for a higher degree of air quality. This provides an incentive for firms to increase pollution abatement efforts, leading to an increase in the degree of air quality.

Suppose People Value Clean Air More as Their Incomes Increase