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Suppose that the 100 mile-long River Yarbrough is heavily polluted from years of industrial manufacturing and poor environmental policy.
1. Suppose that the 100 mile-long River Yarbrough is heavily polluted from years of industrial manufacturing and poor environmental policy. Recently a plan has been developed to clean 50 miles of the River Yarbrough based on a controversial cost-bene t analysis.
The total control cost (TCC) and marginal control cost (MCC) to reduce river pollution are:
TCC = 100m − m2 MCC = 100 − 2m
where m is the number of polluted miles.
The total damage (TD) and marginal damage (MD) of the river pollution is
T D = m2
MD = 2m
a. Compute the total cost of cleaning up 50 miles of the river. Compare this to the reduction in total damage from this plan. b. Now, use the 1st Equimarginal Principle to nd the e cient number of polluted river miles. How many miles should be cleaned?
c. Using your answers in part b, compare to the proposed 50-mile cleanup plan.
d. Is there additional information that may be useful in the above analysis? Speci cally, do you believe the rst equimarginal principle is ignoring variables that would either increase or decrease the bene ts of pollution control?
