Q.13 Take a look at Figure 31-2. Supp... [FREE SOLUTION]

Chapter 31: Q.13 (page 708)

Take a look at Figure 31-2. Suppose that initially, society experiences a degree of air cleanliness that is lower than Q0. What would be true of the marginal benefit in relation to the marginal cost, and why would this fact induce society to increase the degree of air cleanliness toward Q0?

Short Answer

Expert verified

At amounts lower than $Q_{0}$ , the marginal benefit from contamination reduction is more noteworthy than the marginal cost of contamination decrease. Hence, it is valuable for firms to build the level of air neatness.

Step by step solution

Introduction

The socially ideal level is given where the marginal cost is equivalent to the marginal benefit of contamination reduction. Anytime lower than the social ideal, the marginal benefit from contamination decrease will be more prominent than the marginal cost of contamination reduction.

Explanation

Expanding the level of air neatness will be useful till the fact of the matter is its marginal cost is equivalent to the marginal benefit. To focus more prominent than $Q_{o}$ , marginal cost of contamination reduction (cleaning the air) is more noteworthy than the marginal benefit from clean air. Consequently, the general public will decrease the level of clean air to where the marginal benefit from the perfect air is equivalent to the marginal cost of clean air.