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The graph shows the marginal benefit and marginal cost of a waste disposal system in a city of 1 million people. What is the efficient capacity of the waste disposal system and how much does each citizen pay in taxes? The efficient capacity is ... million gallons a day. If the city installs the efficient capacity, each person pays ... in taxes.

The graph shows the marginal benefit and marginal cost of a waste disposal system in a city of 1 million people. What is the efficient capacity of the waste disposal system and how much does each citizen pay in taxes? The efficient capacity is ... million gallons a day. If the city installs the efficient capacity, each person pays ... in taxes.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The graph shows the marginal benefit and marginal cost of a waste disposal system in a city of 1 million people. What is the efficient capacity of the waste disposal system and how much does each citizen pay in taxes? The efficient capacity is ... million gallons a day. If the city installs the efficient capacity, each person pays ... in taxes.

### Graph: Marginal Benefit/Marginal Cost Analysis This graph displays the relationship between marginal benefit and marginal cost as a function of capacity, measured in millions of gallons per day. The vertical axis represents the marginal benefit/marginal cost in dollars per person, while the horizontal axis measures capacity. - **Y-axis (Vertical):** Marginal Benefit/Marginal Cost (dollars per person), ranging from 0 to 100. - **X-axis (Horizontal):** Capacity (millions of gallons per day), ranging from 0 to 5. #### Lines on the Graph: 1. **MSC (Marginal Social Cost):** - Displays a downward trend. - Starts at $100 per person when capacity is at 0. - Decreases to $0 per person as capacity increases to 5 million gallons per day. 2. **MSB (Marginal Social Benefit):** - Displays an upward trend. - Starts at $0 per person when capacity is at 0. - Increases to $100 per person as capacity reaches 5 million gallons per day. #### Intersection: - The two lines intersect at approximately 2.5 million gallons per day, indicating the point where marginal social benefit equals marginal social cost. This graph is essential for understanding the balance point in capacity where the marginal benefits to society equal the marginal costs, an important concept in economic and resource management analysis.
Transcribed Image Text:### Graph: Marginal Benefit/Marginal Cost Analysis This graph displays the relationship between marginal benefit and marginal cost as a function of capacity, measured in millions of gallons per day. The vertical axis represents the marginal benefit/marginal cost in dollars per person, while the horizontal axis measures capacity. - **Y-axis (Vertical):** Marginal Benefit/Marginal Cost (dollars per person), ranging from 0 to 100. - **X-axis (Horizontal):** Capacity (millions of gallons per day), ranging from 0 to 5. #### Lines on the Graph: 1. **MSC (Marginal Social Cost):** - Displays a downward trend. - Starts at $100 per person when capacity is at 0. - Decreases to $0 per person as capacity increases to 5 million gallons per day. 2. **MSB (Marginal Social Benefit):** - Displays an upward trend. - Starts at $0 per person when capacity is at 0. - Increases to $100 per person as capacity reaches 5 million gallons per day. #### Intersection: - The two lines intersect at approximately 2.5 million gallons per day, indicating the point where marginal social benefit equals marginal social cost. This graph is essential for understanding the balance point in capacity where the marginal benefits to society equal the marginal costs, an important concept in economic and resource management analysis.
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