Question

Recall the definition of a normal good given in Chapter 3. Is environmental protection a normal good? If so, is there any connection between this fact and the observation that developing countries are generally less concerned about clean air than are richer countries? Briefly explain. How do the marginal cost and marginal benefit of environmental protection change with economic development?

Answer 1

Environmental protection is desired more when people want to live better life and this is possible when income rises because with income people aim higher and demand clean air. So its a normal good.

Because developing countries have low income so they cannot meet the basic needs such as food education and others and hence they do not have care for clean air. Whereas richer countries demand to lead healthier lives and demand thus clean air.

With economic development people demand more clean air and environment and thus gain more from better environment and hence marginal benefit rises. However as economic development occurs environment necomes purer and thus to improve it more is expensive and hence marginal cost rises as well.