In: Economics
According to the EPA’s prospective analysis of the 1990 to 2010 period, total social benefits (TSB) associated with the CAAA of 1990 are estimated at $690 billion and the comparable total social cost (TSC) estimates are $180 billion (both in $1990).
a. Explain why these data do not communicate whether the regulations outlined by the CAAA of 1990 are efficient.
b. Using three separately labeled graphs of conventionally-shaped TSB and TSC functions show that these values indicate that the regulations outlined in the CAAA of 1990 are (i) efficient; (ii) too lenient; and (iii) too stringent.