ginal social benefit equals The figure below shows the marginal damage cost (MAC
ID: 1117855 • Letter: G
Question
ginal social benefit equals The figure below shows the marginal damage cost (MAC) 8. (MD) curve and the marginal abatement curve facing an industry that discharges a pollutant into the environment. 600 e 500 400 E MD 300 200 100 MAC 0 10 20 30 40 50 60 70 Total emissions (tons per month) a. If environment regulations do not restrict pollution by this industry, the industry - tons per month. At this level of emissions, total dam- age caused by pollution would be $ per month, and total abatement cost would be $- per month. Total social cost of pollution in this industry would be $_ -per month in the absence of any government restrictions on pollution. b. If environmental officials banned all pollution, forcing the industry to elimi- nate all pollution discharges, then total abatement cost for the industry would be per month, and total social cost of zero pollution in this industry would would discharge be $ Explain carefully using the figure above. fromn pollution of $ per month. c. Why is zero pollution in this industry not optimal from society's point of view? tons per month, which results in a total abatement cost of Sper month, and total damage d·The socially optimal level of emissions for this industry is per month. Total social cost is $ _ per month. e. At the optimal level of pollution in part d, exactly what is maximized or minimized?Explanation / Answer
So industry would discharge = 60 tons . Total damage= 300*60 = $1800.
Total Abatement cost = 0
Total social Cost = 300*60 =1800
Socially efficient level = 200 tons per month. Total abatement cost = $8000 per month. Total damage = 200*40 = 8000
Total Social cost is $8000
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