Chapter 12: Q.37 (page 297)
Can extreme levels of pollution hurt the economic
development of a high-income country? Why or why
not?
The economic prosperity of any country is reliant on its resources, which are rarely hurt by pollution.
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From an economist's perspective, is it sound policy
to pursue a goal of zero pollution? Why or why not?
Refer to Table 12.2. The externality created by the refrigerator production was \(100. However, once we accounted for both the private and additional external costs, the market price increased by only \)50. If the external costs were \(100 why did the price only increase by \)50 when we accounted for all costs?
The state of Colorado requires oil and gas companies who use fracking techniques to return the land to its original condition after the oil and gas extractions. Table shows the total cost and total benefits (in dollars) of this policy.
Table
| Land Restored (in acres) | Total Cost | Total Benefit |
| 0 | \(0 | \)0 |
| 100 | \(20 | \)140 |
| 200 | \(80 | \)240 |
| 300 | \(160 | \)320 |
| 400 | \(280 | \)380 |
(a) Calculate the marginal cost and the marginal benefit at each quantity (acre) of land restored. See Production, Costs and Industry Structure if you need a refresher on how to calculate marginal costs and benefits.
b. If we apply marginal analysis, what is the optimal amount of land to be restored?
What does a point inside the production possibility frontier represent?
Would environmentalists favor command-and-control policies as a way to reduce pollution? Why or why not?
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