Analysis the net benefits of cleanup are maximized, Macroeconomics

Consider the case of cleaning up chemical contamination at an industrial site. The marginal benefits of additional cleanup are decreasing as the amount of cleanup increases. However, the marginal costs of the cleanup are actually decreasing (rather than increasing) in the level of cleanup as well. The reason is that much of the cost of the cleanup involves first locating contamination and then digging to expose contaminated soil. Therefore, the most expensive unit to clean up is the very first. We can depict this graphically.

First, if you were only looking at whether the first small increment of cleanup passed a benefit-cost test, what would you conclude?

Second, does the "equimarginal principle" (MB=MC) lead to a situation where the net benefits of cleanup are maximized?

 

Posted Date: 4/1/2013 4:13:10 AM | Location : United States







Related Discussions:- Analysis the net benefits of cleanup are maximized, Assignment Help, Ask Question on Analysis the net benefits of cleanup are maximized, Get Answer, Expert's Help, Analysis the net benefits of cleanup are maximized Discussions

Write discussion on Analysis the net benefits of cleanup are maximized
Your posts are moderated
Related Questions
Jessica Alba, a famous actress, starts the baby and family products business, The Honest Company, with Christopher Gavigan. Alba and Gavigan set up their site so families can choos

The events X and Y are mutually exclusive. Suppose P(X)=.05 and P(Y) =.02. What is the probability of either X or Y occurring? What is not probability of X nor Y happens?

Kennesaw University Professor Frank A. Adams III and Auburn University Professors A. H. Barnett and David L. Kaser man recently estimated the effect of legalizing the sale of cadav

Which of the following is an important consideration in short run factor-proportions trade analysis? a. Comparative advantages only occur in theory. b. Specific factors are a

Q. Money market with inflation and rising money supply? Figure: The money market with inflation and rising money supply If we let π M refer the growth rate in money

Can the federal government go bankrupt? Explain.

The real interest rate Interest rates and inflation Suppose you have 1 million on 1st January 2008. A basket of goods and services similar to the CPI basket costs 100,000.

What is the difference between merchantilism and absolute theory?

Suppose the utility function is given by: u(x,y) = 3x+4y. What kind of goods are X and Y and what is the MRS?