Question

1. Costs of Reducing Water Pollution

Water pollution (PPM)	45	35	25	10	0
Social benefit (dollars)	120	190	240	270	280
Social cost (dollars)	20	25	35	65	100
Marginal social benefit (dollars per PPM)		_____	_____	_____	_____
Marginal social cost (dollars per PPM)		_____	_____	_____	_____

a) Using the Costs of Reducing Water Pollution table, what is the marginal social benefit (in dollars per PPM) of reducing pollution rates from 35 to 25 PPM?

b) Using the Costs of Reducing Water Pollution table, what is the marginal social benefit (in dollars per PPM) of reducing pollution rates from 25 to 10 PPM?

c) Using the Costs of Reducing Water Pollution table, what is the marginal social benefit (in dollars per PPM) of reducing pollution rates from 10 to 0 PPM?

d)Using the Costs of Reducing Water Pollution table, what is the marginal social cost (in dollars per PPM) of reducing pollution rates from 25 to 10 PPM?

Answer 1

Water Pollution (PPM)	45	35	25	10	0
Social Benefit (Dollars)	120	190	240	270	280
Social Cost (Dollars)	20	25	35	65	100
Marginal Benefit (Dollars)		70	50	30	10
Marginal Cost (Dollars)		5	10	30	35

The Marginal benefit is calculated by subtracting the total benefit of the immediately lower pollution level from the instant pollution level.

For Example, Marginal Benefit of moving from 45PPM to 35PPM is = Total Benefit of 35PPM - Total Benefit of 45 PPM = 190 - 120 = 70.

The same logic goes for cost as well.

So now,

a) Using the Costs of Reducing Water Pollution table, what is the marginal social benefit (in dollars per PPM) of reducing pollution rates from 35 to 25 PPM?: $50

b) Using the Costs of Reducing Water Pollution table, what is the marginal social benefit (in dollars per PPM) of reducing pollution rates from 25 to 10 PPM? $30

c) Using the Costs of Reducing Water Pollution table, what is the marginal social benefit (in dollars per PPM) of reducing pollution rates from 10 to 0 PPM? $10

d)Using the Costs of Reducing Water Pollution table, what is the marginal social cost (in dollars per PPM) of reducing pollution rates from 25 to 10 PPM? $30

If you found this helpful, please rate it so that I can have higher earnings at no extra cost to you. This will motivate me to write more.