Economists Kenneth Chay and Michael Greenstone Found That in the Two

question 47

Multiple Choice

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)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 benefits similar to those 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 could be realized. Today, when the level of pollution is much lower, such drastic measures are unnecessary.

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Definitions:

Consumer Surplus

The divergence between what consumers are able and willing to shell out for a product or service and the actual cost they incur.

Marginal Benefit

The uplift in satisfaction or value derived from the consumption of an additional unit of a product or service.

Marginal Cost

An additional expense incurred from the production or acquisition of one more unit of a good or service.

Efficiency

The ability of a system or process to achieve a goal using the least amount of resources possible.