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
When a country abandons its national currency and adopts the currency of the United States, this is known as: A) A floating exchange rate system. B) Dollarization. C) A speculat

i want a project topics in macroeconomics

A sample of 60 mutual funds was taken and the mean return in the sample was 13% with a standard deviation of 6.9%. The return on a particular index of stocks (against which the mut

ACCOUNTING SYSTEM-EXAMPLE I  Consider a very simple economy. It consists of a. A number of households. b. A single productive organization, a 'firm' - say the Jam Corpora

Aggregate Supply (AS) We now shift our attention to the supply side of the macroeconomy. Aggregate supply explains the production and pricing side of the economy and the behav

critically analyse the ways at which the govement of zimbabwe has put in place to address unequal employment opportunitiesbetween men andwomen

Solution of the following question The Nigerian president goodluck jonathan has just returned from Germany and the following economic transactions were obtained thus,use the data t

what is the difference between classical and non-classical model

The marginal approach to profit maximization means that a firm should produce until a. marginal revenue equals zero b. marginal revenue equals marginal costs c. marginal cost becom

Explain the excise terms of tax. The excise terms of tax: a. Tax incidence b. Excess burden c. Deadweight loss d. Tax revenue