Springville Virginia is interested in improving the quality

Springville, Virginia, is interested in improving the quality of its lake by decreasing the level of water pollution. (Note that Springville is already meeting required environmental regulations.) The level of a chemical pollutant in a lake is measured in parts per million (ppm). The lake currently has a pollution level for this chemical of 100 parts per million. The table to the right shows the costs associated Amount of Cleanup Total Cost 10 ppm cleaner 20 ppm cleaner 30 ppm cleaner 40 ppm cleaner $192,000 $395,000 $650,000 $1,020,000 lake. 2.2· The marginal costs associated with cleaning the lake as more cleanup is achieved. O A. increase O B. decrease

Solution

increase

Reason

We can see that the marginal cost which is the increase in the total cost is increasing as the lake is becoming more and more cleaner. For example, from 10 ppm to 20 ppm, it is (395000-192000)=203000 which is much lower than 1020-650=370,000 from 30 ppm to 40 ppm