- A large urban hospital produces solid waste. The table below
shows the hospital’s marginal cost of reducing waste and the
marginal benefit to society of doing so.
Tonnes of waste abated MC($) MB($)
1st 1000 4000
2nd 1500 3800
3rd 2000 3500
4th 3000 3000
5th 4500 2000
6th 7000
a. Draw a scale diagram of the marginal costs and benefits
of reducing solid waste.
b. What is the socially optimal amount of waste to abate?
c. What is the net benefit to society of abating the socially
optimal amount of waste?
d. What is the net benefit to society of abating the final
tonne of waste if the hospital abates six tonnes?
