Question

2. A chemical factory is located next to a farm. Airborne emissions from the chemical fac tory damage crops on the farm. The marginal benefits of emissions to the factory and the marginal costs of damage to the farmer are as follows: Quantity of emissions Marginal benefit to factory (S000) 320 280 240 200 160 120 80 40 0 Marginal cost to farmer ($000) 110 130 150 170 190 210 230 250 270 From an economic point of view, what is the best solution to this environmental conflict of interest? How might this solution be achieved? How should considerations of efficiency and equity be balanced in this case? 100 200 300 400 500 600 700 800 900

Answer 1