cost. This is at four million gallons.
554

c. Marginal analysis tells us if the marginal costs of cleanup are greater than the marginal benefit,

society could use those resources more efficiently elsewhere in the economy.

11. a. See the next table for the answers, which were calculated using the traditional calculation of marginal

cost equal to change in total cost divided by change in quantity.

Land Restored (in acres) Total Cost [marginal cost] Total Benefit [marginal benefit]

0

100

200

300

400

$0

$20 [0.2]

$80 [0.6]

$160 [0.8]

$280 [1.2]

$0

$140 [1.4]

$240 [1]

$320 [0.8]

$480 [0.6]

b. The optimal amount of restored land is 300 acres. Beyond this quantity the marginal costs are greater

than the marginal benefits.

12.

Protect

Not Protect

Country B

Country

A

Protect

Both A and B have a cost of 10 and a

benefit of 16; each country has net = 6

A has a cost of 10 and a benefit of 8 (net =

–2); B has a cost of 0 and a benefit of 8 (

net = 8)

Not
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