The marginal benefit of reducing pollution and the marginal cost of reducing pollution are given by the following equations: MB = - 2U2 + 18,and MC = 2U2 + 2,where U is the number of units of pollution abatement.What is the optimal level of pollution abatement?

Question

Quizplus · Accepted Answer

To find the optimal level of pollution abatement, we need to set the marginal benefit equal to the marginal cost and solve for U:

MB = MC 
- 2U^2 + 18 = 2U^2 + 2 
4U^2 = 16 
U^2 = 4 
U = 2

Therefore, the optimal level of pollution abatement is 2 units.

The Marginal Benefit of Reducing Pollution and the Marginal Cost