Chapter 3, Problem 7P

Suppose the total benefit and total cost to society of various levels of pollution reduction are as follows:

Complete column $\left(4\right)$.

Use total net benefit in column $\left(4\right)$ to show that if the U.S. Environmental Protection Agency (EPA) wants to maximize total net benefit. then it should require $3\text{ units}$ of pollution reduction.

Complete columns $\left(5\right)$ and $\left(6\right)$. starting with the step from $0\text{ to }1\text{ units}$ of pollution reduction.

Show that the Principle of Optimization at the Margin also implies that the EPA should require $3\text{ units}$ of pollution reduction.