Suppose that the benefits and costs of water quality policy have been estimated as follows:
MSB = 40 - 0.8A MSC = 10 + 0.2A
TSB = 40A - 0.4A² TSC = 10A + 0.1A²,
where A is the percentage of pollution abatement and the benefits and costs are measured in thousands of dollars.
a. Determine the range of abatement within which policy achieves positive net benefits.
b. Find the efficient level of abatement.

Question

Quizplus · Accepted Answer

The Answer of Suppose that the benefits and costs of water quality policy have been estimated as follows: MSB = 40 - 0.8A MSC = 10 + 0.2A TSB = 40A - 0.4A² TSC = 10A + 0.1A², where A is the percentage of pollution abatement and the benefits and costs are measured in thousands of dollars. a. Determine the range of abatement within which policy achieves positive net benefits. b. Find the efficient level of abatement.

Suppose That the Benefits and Costs of Water Quality Policy