The marginal cost of pollution is MC = 2Q, while the marginal abatement cost is MAC = 12 - Q. Government regulators incorrectly estimate the marginal abatement cost at MAC_E = 9 - Q. The level of pollution, measured in tons of glop, is Q. Based on the government's incorrect estimate of marginal abatement costs, the government thinks the socially optimal level of pollution is ____. A) 2 B) 3 C) 4 D) 5

Question

Quizplus · Accepted Answer

To find the socially optimal level of pollution based on the government's incorrect estimate, set the marginal cost of pollution (MC) equal to the incorrectly estimated marginal abatement cost (MAC_E). This gives 2Q = 9 - Q. Solving for Q gives Q = 3.

The Marginal Cost of Pollution Is MC = 2Q, While