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In the first years following the passage of the Clean Air Act in 1970, air pollution declined sharply, and there were important health benefits, including a decline in infant mortality. According to an article in the Economist magazine, however, recently some policymakers "worry that the EPA is constantly tightening restrictions on pollution, at ever higher cost to business but with diminishing returns in terms of public health."
a. Why might additional reductions in air pollution come at "ever higher cost"? What does the article mean that these reductions will result in "ever diminishing returns in terms of public health"?
b. How should the federal government decide whether further reductions in air pollution are needed? Source: "Soaring Emissions," Economist, June 2, 2011.
assume perfect competition. summerland is a small country that takes world price of corn as given. its domestic supply
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Monopolistic competition is similar to perfect competition in that:
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