Examine the following marginal costs and marginal benefits associated with water cleanliness in a given locale: a.
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a. What is the optimal degree of water cleanliness?
b. What is the optimal degree of water pollution?
c. Suppose that a company creates a food additive that offsets most of the harmful effects of drinking polluted water. As a result, the marginal benefit of water cleanliness declines by $40,000 at each degree of water cleanliness at or less than 80 percent. What is the optimal degree of water cleanliness after this change?
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