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In 1997, the EPA proposed an increase in the national air quality standards for particulate mat- ter (PM). Because the change was considered a major rule, the agency was required to conduct an RIA and assess the potential costs and benefits of the proposed standard. The completed RIA can be accessed at www.epa.gov/ttn/oarpg/ naaqsfin/ria.html. As part of this RIA, benefit and cost data for the existing standard were given and are replicated here:
Annual Control Cost
a. Examine the control cost estimates, and provide a plausible explanation of why there are incremental costs differences across regions for meeting the PM standard.
b. Economically, can you justify the PM standard? Explain.
c. List some of the limitations associated with benefit-cost analysis. Which of these are appli- cable to this particular economic analysis? Explain.
Control Region ($1990 millions)
Midwest/Northeast 380
Southeast 2
South Central 230
Rocky Mountain 210
Northwest 140
West 130
National 1,100
The market represented in exhibit above is allowed to operate freely, find the total employment in the market and total employment by the firm
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