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Chia, Inc Has a Marginal Abatement Cost Curve of MACC =

Question 106

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Chia, Inc. has a marginal abatement cost curve of MACC = 115 - 5Q, where Q represents fertilizer runoff measured in parts per million (ppm) cleaned up; however, regulators incorrectly believe that it is actually MACE = 110 - 10Q. If the marginal cost of pollution is given by MCP = 15Q, illustrate the area of deadweight loss generated with a quantity restriction on pollution of 4.4 ppm, based on regulators' incorrect estimation of abatement costs.

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