Suppose the following are the MSB and MSC functions for PSD and nonattainment areas in Denver, Colorado:

PSD:   MSB_PSD = 30 ‒ 0.2A

NON:  MSB_NON = 34 – 0.3A

MSC_PSD = 12 + 0.1A

MSC_NON = 18 + 0.2A

where A is the level of abatement in each region.

a. Find the efficient abatement level for each area, i.e., A_PSD and A_NON. Based on these results, are the differentiated standards for PSD areas supported on efficiency grounds? Briefly explain why or why not. 

b. Is the relationship between MSB_PSD and MSB_NON reasonable based on the legislated distinction between PSD areas and nonattainment areas? Briefly explain.