The Data in the Table Show the Marginal Costs and Marginal

question 78

Multiple Choice

The data in the table show the marginal costs and marginal benefits to a city for five different levels of pollution control. Refer to the above table.If the city seeks an optimal reduction of the externality,then it will select how many tons of pollution abatement?

• A) 500
• B) 600
• C) 700
• D) 800

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Definitions:

Bundles

Combinations of goods and services offered together as a single package, often at a discounted price.

Weak Axiom

A principle in consumer theory that if a consumer prefers bundle A over bundle B when both are affordable, they will not choose B over A when income or prices change, holding everything else constant.

Strong Axiom

Often refers to the strong axiom of revealed preference in economics, a principle used to infer a consumer's complete preference ordering over goods.

Revealed Preference

A theory suggesting that the preferences of consumers can be understood from their purchasing habits and choices.