The Economic Way of Thinking 13th Edition by David Prychitko, Peter Boettke, Paul Heyne

Exercise 9

Surveys by the Michigan Highway Department showed that beverage container litter decreased 82 percent and total litter decreased 32 percent when the state adopted a mandatory-deposit law for beer and soft-drink containers. According to one estimate of the effect of the law on prices, Michigan consumers were paying an extra $300 million per year for beer and soft drinks as a result of the law.
(a) If these figures are correct, is this mandatory-deposit law "cost effective" in your judgment? How could you decide?
(b) Suppose we knew that Michigan citizens actually value the reduction in litter at more than $300 million per year. Would this demonstrate the cost-effectiveness of the mandatory-deposit law?
(c) How many people could be hired full-time to walk around picking up litter for $300 million per year? Assume that litter lifters receive $5 an hour, which works out to $10,000 a year for 50 weeks of 40 hours each. Do you think such an army of full-time litter lifters could reduce total litter by considerably more than 32 percent?