The figure shows the trade-off between consumption and quality of theenvironment. Which of the following statements best explains the shape of thefeasible consumption frontier?100Feasible consumption frontier(given abatement technology)Maximum levelof consumptionzero abatementFeasible setE with zeroabatement500Quality of the environment, E Consumption of goods and services (billions €)The marginal rate of transformation increases as more consumption is given up.As we sacrifice more and more consumption, the marginal gains in terms ofenvironmental quality increase.The diagram shows that the environmental gains from giving up consumptionare large (and cheap) at the beginning. This is because it assumes that we adoptthe most cost-effective technologies first.We care less about giving up some consumption when consumption is high (sayfrom 500 to 450) than we do when consumption is low (say 100 to 50).

A consumption possibilities boundary represents the various amounts of two different things that a…

Answered: The figure shows the trade-off between…

The figure shows the trade-off between consumption and quality of the environment. Which of the following statements best explains the shape of the feasible consumption frontier?

EBK HEALTH ECONOMICS AND POLICY

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ISBN:9781337668279

Author:Henderson

Publisher:Henderson

Chapter6: Population Health

Section: Chapter Questions

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Welfare Analysis

Welfare analysis of the society is related to welfare economics. From the economic point of view former welfare economics refers to that subject which uses the techniques of microeconomics to analyse and evaluate the welfare at the economic or aggregate level.

Question

The figure shows the trade-off between consumption and quality of the
environment. Which of the following statements best explains the shape of the
feasible consumption frontier?
100
Feasible consumption frontier
(given abatement technology)
Maximum level
of consumption
zero abatement
Feasible set
E with zero
abatement
500
Quality of the environment, E

Consumption of goods and services (billions €)
The marginal rate of transformation increases as more consumption is given up.
As we sacrifice more and more consumption, the marginal gains in terms of
environmental quality increase.
The diagram shows that the environmental gains from giving up consumption
are large (and cheap) at the beginning. This is because it assumes that we adopt
the most cost-effective technologies first.
We care less about giving up some consumption when consumption is high (say
from 500 to 450) than we do when consumption is low (say 100 to 50).

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