CRX6 - Take-home Exercise 3 Econ 101.01 – Introductory...

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Unformatted text preview: Take-home Exercise 3 Econ 101.01 – Introductory Microeconomics Prof. Potepan 10 October 2011 1. Consider the following data for the externality costs of pollution and the abatement cost of cleaning up pollution. Total External Cost measures the dollar cost of the environmental damage caused by the pollution at various levels. If society wants to clean up or eliminate pollution, there will be a cost to doing so and the Total Cost of Abatement measures this cost. In the table below, first fill in the Abatement level that corresponds to each level of Pollution. Next, calculate the Marginal External Cost and the Marginal Cost of Abatement for each change in the level of Pollution/Abatement from 0 to 1, 1 to 2, 2 to 3, etc. Pollution Abatement Total External Cost of Pollution (Environmental Damage) Marginal External Cost of Pollution Total Cost of Abatement Marginal Cost of Abatement 0 ________ 0 $2,800 ________ ________ 1 ________ $75 $2,100 ________ ________ 2 ________ $175 $1,500 ________...
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CRX6 - Take-home Exercise 3 Econ 101.01 – Introductory...

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