Economists Kenneth Chay and Michael Greenstone found that in the two years following the passage of the Clean Air Act of 1970, the sharp reduction in air pollution also led to a decline in infant deaths
Although this and other studies provide compelling evidence of the link between pollution and infant health, it is not clear that reductions from the much lower levels of ambient pollution today would have the same effect. Which of the following reasons could explain this?
A) Today, the level of pollution is much higher. Therefore, it will take a much larger reduction in air pollution to reap benefits similar to those in 1970.
B) The cost of pollution abatement today is much higher than it was in the 1970s. Thus, it would be far more costly to achieve the same level of benefit today as the benefit achieved in 1970.
C) When levels of pollution are high, the marginal benefit of reducing pollution is low. Therefore, it was necessary to significantly reduce air pollution in 1970 before benefits could be realized. Today, when the level of pollution is much lower, such drastic measures are unnecessary.
D) When levels of pollution are high, the marginal benefit of reducing pollution also is high. It follows therefore that the benefit of reducing air pollution in 1970 would be much higher than the benefit from a proportional reduction in air pollution today when the level of pollution is much lower.
D
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The government can overcome the inefficiency created by a good with an external benefit by using
A) public provision. B) marketable permits. C) taxes. D) emission charges. E) None of the above answers is correct.
The average tax rate is calculated as
A) total income divided by the total tax paid. B) the change in income divided by the change in total tax paid. C) total tax paid divided by total income. D) the change in total tax paid divided by the change in income.
A(n) _____ is the benefit or a cost of an activity that affects third parties
Fill in the blank(s) with the appropriate word(s).
The natural rate of unemployment
a. is constant over time. b. varies over time, but can't be changed by the government. c. is the socially desirable rate of unemployment. d. does not depend on the rate at which the Fed increases the money supply.