Economists Kenneth Chay and Michael Greenstone Find That in the Two

question 245

Multiple Choice

Economists Kenneth Chay and Michael Greenstone find 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) 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.
• B) 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.
• C) Today, the level of pollution is much higher. Therefore, it will take a much larger reduction in air pollution to reap similar benefits as it did in 1970.
• D) 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 can be realized. Today, when the level of pollution is much lower, such drastic measures are unnecessary.

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Definitions:

Average Tax Rate

The percentage of total taxable income that is paid in taxes, calculated by dividing the total tax paid by the total taxable income.

Taxable Income

The portion of income that is subject to taxation after allowances, deductions, and exemptions.

Progressive Taxes

A tax system in which the tax rate increases as the taxable amount increases, meaning higher income individuals pay a higher percentage of their income in taxes.

State and Local Taxes

Taxes imposed by state and local government entities that can include income, sales, and property taxes.