Every 1 percent reduction in the level of particulates in the air costs $200,000. Low-income residents in a region have a demand for particulate reduction of R = 10 − P, where R is the level of particulate reduction and P is the price per 1 percent reduction. High-income residents have a demand for particulate reduction of R = 40 − 2P.

a. Is reduction of the level of particulates a public or private good?

b. What will the market demand for particulate reduction be?

c. What is the optimal level of particulate reduction?