Chapter 16, Problem 3P

To determine

(a)To draw the marginal benefit curves for two plants A and B where Marginal benefit of A is less than plant marginal benefit of B and both emit same level of pollution without government intervention.

(b) Do you expect the total quantity of pollution was more or less than optimal level of pollution before the program was implemented? Explain

(c) If the plants are participant of 33/50 program then mark target level of pollution in 1995 for both? Which was required to emit less and is this solution efficient?

(d) What are the other policies resembling to 33/50 program? what are the shortcomings

Concept:

Marginal benefit: The additional utility that a person receives after consuming additional unit of a good.

Optimal level of pollution: The level at which cost of reducing pollution is less than benefit of reducing pollution