largest employer is a manufacturing plant. City officials have
grown concerned by the methane emissions from this plant and
conducted a survey of the perceived benefits of methane reductions.
The costs of reducing emissions from the plant are known from a
previous study. The plant is currently emitting 200 Lbs. per day.
The graph below illustrates the marginal benefits and marginal
costs of reducing methane emissions from the plant.
- The City Of Holbeck Has A Population Of 50 000 People The Largest Employer Is A Manufacturing Plant City Officials Hav 1 (19.98 KiB) Viewed 75 times
should be reduced by 40 Lbs. per day. Based on the illustration
above, estimate the total benefits, the total costs, and the total
net benefits of a 40 Lbs. reduction.
Question 2.2 Another city official points out that a 40 Lbs.
emissions reduction would not be efficient. In 200 words or less,
explain what the efficient reduction level is in this case and how
you identify this level based on the graph above.
Question 2.3 A group of students has launched a protest in favor
of harsher emission reductions. Their argument is that methane
emissions have global impacts that are not accounted for in the
initial analysis. They have quantified that for each emissions
reduction level the marginal benefits are $20 higher than initially
estimated. Illustrate this point, as well as the efficient
emissions reduction level in a chart similar to the one above.
Question 2.4 The owners of the manufacturing plant argue that
the cost estimates from the original study underestimates the
actual costs of emissions reductions with as much as 25% for all
reductions levels. If they are correct, how would this change your
answer to Question 2.3?
$100 $90 $80 $70 $60 $50 $40 $30 $20 $10 SO 0 2 20 40 160 180 200 60 80 100 120 140 Lbs of methane reduced per day - Marginal benefits Marginal costs