Assume you are responsible for assessing whether the air quality standard for carbon monoxide (CO) is set at the efficient level for some region. To accomplish this task, you have estimated the following marginal benefit and marginal cost functions for CO abatement:

MSB = 20 – 0.25A

MAC_mkt  = 6 + 0.25A

MCE = 2 + 0.1A,

where A is the percentage of CO abatement, and MSB, MAC_mkt and MCE are measured in millions of dollars.

a. Find the MSC of abatement function.

b. Solve for the efficient level of abatement, and illustrate graphically.

c. Show the importance of the MCE by determining the effect on the solution if these government costs were ignored. Support your answer algebraically and graphically.