Problems
11. Consider the following costs and benefits associated with
cleaning up a polluted city lake.Cleanliness of Water
(%)Marginal Cost
($)Marginal Benefit
($)0 50 000 550 000
20 100 000 400 000
40 160 000 300 000
60 230 000 230 000
80 350 000 180 000
100 infinite 150 000a. Explain why the marginal cost of pollution reduction
increases as the cleanliness of the water increases. Plot
the MC curve in a diagram.