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TABLE 12.7

Access for free at openstax.org
12 • Self-Check Questions 301

10. Suppose a city releases 16 million gallons of raw sewage into a nearby lake. Table 12.8 shows the total

costs of cleaning up the sewage to different levels, together with the total benefits of doing so. (Benefits

include environmental, recreational, health, and industrial benefits.)

Total Cost (in thousands of dollars) Total Benefits (in thousands of dollars)

16 million gallons Current situation

Current situation

12 million gallons

50

8 million gallons

150

4 million gallons

500

0 gallons

1200

TABLE 12.8

800

1300

1650

1900

a. Using the information in Table 12.8, calculate the marginal costs and marginal benefits of reducing

sewage emissions for this city. See Production, Costs and Industry Structure if you need a refresher on

how to calculate marginal costs.

b. What is the optimal level of sewage for this city?
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