Question

Suppose the graph below shows the benefit to a commercial fishery given reductions in N loads and the total cost to reduce N loads to a particular waterbody (assume an improved fishery is the only benefit of N reduction). What total N load reduction would maximize total fishery benefits (the level associated with highest overall "environmental quality")?

Total Q of N reduction	Total Fishery Benefits	Total N Abatement Cost
0	0	0
100,000	$1,000,000	$300,000
200,000	$1,800,000	$700,000
300,000	$2,400,000	$1,250,00
400,000	$2,700,000	$2,300,000
500,000	$2,900,000	$4,300,000
600,000	$3,000,000	$8,300,000
700,000	$3,050,000	$18,300,000

100,000

200,000

300,000

400,000

500,000

600,000

700,000

Question 12

Suppose the graph below shows the benefit to a commercial fishery given reductions in N loads and the total cost to reduce N loads to a particular waterbody (assume an improved fishery is the only benefit of N reduction). What is the marginal abatement cost of reducing N loads from 400,000 to 500,00 lbs?

Total Q of N reduction	Total Fishery Benefits	Total N Abatement Cost
0	0	0
100,000	$1,000,000	$300,000
200,000	$1,800,000	$700,000
300,000	$2,400,000	$1,250,00
400,000	$2,700,000	$2,300,000
500,000	$2,900,000	$4,300,000
600,000	$3,000,000	$8,300,000
700,000	$3,050,000	$18,300,000

$3

$9

$10

$20

Answer 1

11. 700,000
(We can see that the maximum value of total fishery benefits is $3,050,000 at total N load reduction = 700,000)

12. $20
(Marginal abatement cost = Change in total abatement cost/Reduction in N loads
= (4,300,000-2,300,000)/(500,000-400,000) = 2,000,000/100,000 = 20)