Q. 5 Consider the diagram in Problem ... [FREE SOLUTION]

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Chapter 31: Q. 5 (page 707)

Consider the diagram in Problem $31 - 4$ , and answer the following questions.
a. Suppose that a new technology for reducing water pollution generates a reduction in the marginal cost of pollution abatement at every degree of water cleanliness. After this event occurs, will the optimal percentage degree of water cleanliness rise or fall? Will the cost incurred for the last unit of water cleanup increase or decrease? Provide a diagram to assist in your explanation.
b. Suppose that the event discussed in part (a) occurs and that, in addition, medical studies determine that the marginal benefit from water pollution abatement is higher at every degree of water cleanliness. Following both events, will the optimal percentage degree of water cleanliness increase or decrease? In comparison with the initial optimum, can you determine whether the cost incurred for the last unit of water cleanup will increase or decrease? Use a new diagram to assist in explaining your answers.

Short Answer

Expert verified

a. The percentage grade sanctity lessens the costs of preceding scrubbing around the same pace.

b. That effect of high limited benefit as well as potentially lower price.

Step by step solution

Introduction

Same as rings true in break - even point: unless they increase output, whose percentage figure is projected to grow. For essence, a percent rate increases smarter than the average rate, and indeed the latter include an important connection.

Explanation (a)

This break - even point if reducing emissions will just be decreased if advanced innovation was introduced.

These report demonstrates shows cutting the net income reduces the number of integrity despite decreasing the cost of the earlier cleaning:

As seen in the graph, a drop with in contribution margin resulting in such an improvement with in amount of sanitation (shown by $Q$ and $Q^{鈭�}$ ) and just a reduction in the value from the last wipe up (represented by $C$ and $C^{鈭�}$ ).

Explanation (b)

b. That economic profit builds as both a result of the growing returns. That effect of high limited benefit as well as potentially lower price is represented in the figure elsewhere here: