a) If the total benefits to society of achieving some specific level of pollution control are significantly greater than the total costs to society of doing so, will it necessarily be economically efficient (socially optimal) to do so? Explain your answer with words and a graph. b) In March 2011, the US EPA issued a report that looked at the results of the Clean Air Act from 1990 to 2020 (see: http://www.epa.gov/air/sect812/prospective2.html). This review found that in the central estimate of the CAA’s impact, benefits exceeded costs by a ratio of 30 to 1. This leads some environmental policy commentators to conclude that the EPA had not gone far enough in reducing air pollution. Under what conditions would a benefit cost ratio of 30:1 imply that it would be economically efficient to further reduce air pollution under the CAA? Assuming the EPA’s benefit-cost estimate is correct, is it possible that it could actually be economically efficient to loosen, rather than strengthen, air pollution regulations? Explain your answer with words and a graph.
a) If the total benefits to society of achieving some specific level of pollution control are
significantly greater than the
economically efficient (socially optimal) to do so? Explain your answer with words and a
graph.
b) In March 2011, the US EPA issued a report that looked at the results of the Clean Air Act
from 1990 to 2020 (see: http://www.epa.gov/air/sect812/prospective2.html). This review
found that in the central estimate of the CAA’s impact, benefits exceeded costs by a ratio of
30 to 1. This leads some environmental policy commentators to conclude that the EPA had
not gone far enough in reducing air pollution. Under what conditions would a benefit cost
ratio of 30:1 imply that it would be economically efficient to further reduce air pollution
under the CAA? Assuming the EPA’s benefit-cost estimate is correct, is it possible that it
could actually be economically efficient to loosen, rather than strengthen, air pollution
regulations? Explain your answer with words and a graph.
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