Sulfur dioxide is an important component. of fuel combustion. it, is produced du

Question

Sulfur dioxide is an important component. of fuel combustion. it, is produced during smelting, winemaking and other industrial proves (Sulfur dioxide is responsible for the words "contains sulfites" found on wine labels.) Sulfur dioxide and is also one of the major precursors of acid rain, which has acidified soil*. lakes and stream* accelerated corrosion of buildings and monuments, and reduced visibility. Assume that scientific studies provide you with the following information concerning the benefits and costs of sulfur dioxide emissions: Benefits of abating (reducing) emissions: MB = 500 - 20A Costs of abating emissions; MC = 200 + 5A Where A is the quantity abated in millions of tons and the benefits and costs arc given in dollars per ton. What is the socially efficient level of emissions abatement? What arc the marginal benefit and marginal cost of abatement at the socially efficient level of abatement?

Explanation / Answer

for socially efficient MB=MC 500-20A=200+5A A=12 marginal benefit = 500-20*12=260 marginal cost= 200+5*12= 260

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