The costs of many environmental regulations can be calculated in ...

[Ebrown]

The costs of many environmental regulations can be calculated in dollars but the benefits often are in terms of lives saved (mortality) or decreases in the incidence of a particular disease (morbidity).
 
  What does this imply about the cost-benefit analysis of environmental regulations? There is an old saying You can't put a price on a human life. Do you agree or disagree? Explain.

Question 2

How is average variable cost calculated? If a firm has total variable costs of 19,200 when producing 575 units, what is the firm's average variable cost?
 
  What will be an ideal response?

[duy1981999]

Answer to Question 1

We will need to translate the mortality and morbidity data into dollars if we are going to compare the costs and benefits of environmental regulation. For example, if we knew that a new regulation would impose a cost of 20 million on firms and that it would save one life, we would need to know whether a life is worth more than 20 million or less than 20 million. As ghoulish as these efforts to place a dollar value on a life may sound, government (and individuals, for that matter) need to make these calculations implicitly or explicitly. There is very substantial economic literature on the value of a life. Most studies estimate the value of a life in the range of 7 million to 9 million.

Answer to Question 2

Average variable cost is calculated by dividing total variable cost by the number of units of output. Therefore, the firm's average variable cost is equal to 19,200/575 which is equal to 33.39 .

[Ebrown]

TYSM

[parker125]

Excellent