Economics: Principles, Problems, and Policies, 19th Edition

Published by McGraw-Hill Education
ISBN 10: 0073511447
ISBN 13: 978-0-07351-144-3

Chapter 16 - Public Finance: Expenditures and Taxes - Questions - Page 355: 7

Answer

Reducing water flow from storm drains has a low marginal benefit, meaning the MB curve would be located far to the left of where it is in the text diagram. It will intersect the MC curve at a low amount of pollution abatement, indicating the optimal amount of pollution abatement (where MB = MC) is low. Any cyanide in public water sources could be deadly. Therefore, the marginal benefit of reducing cyanide is extremely high and the MB curve in the figure would be located to the extreme right where it would intersect the MC curve at or near 100 percent.

Work Step by Step

Conceptual Question. No Work Needed.
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