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.
a. Solve for the socially optimal level of pollution by using MAC.
b. Based on the government's incorrect estimate of marginal abatement costs, what does the government think is the socially optimal level of pollution?
c. If the government uses a quota to intervene in the market, how much pollution will be omitted?
d. If the government taxes each ton of glop, how much pollution will be omitted?
e. Does quantity restriction or the price-based intervention get us closer to the socially optimal output level?

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The Answer of 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. a. Solve for the socially optimal level of pollution by using MAC. b. Based on the government's incorrect estimate of marginal abatement costs, what does the government think is the socially optimal level of pollution? c. If the government uses a quota to intervene in the market, how much pollution will be omitted? d. If the government taxes each ton of glop, how much pollution will be omitted? e. Does quantity restriction or the price-based intervention get us closer to the socially optimal output level?

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