Suppose economists estimate the following cost and benefit functions associated with the 1990 CAAA: TSB= 75A
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Suppose economists estimate the following cost and benefit functions associated with the 1990 CAAA:
TSB= 75A – 0.4A2
MSB = 75 – 0.8A
TSC= 25A +0.85A2
MSC = 25 + 1.7A,
where A represents the percent of pollution abatement, and costs and benefits are measured in millions of dollars.
a. Find the TSB and TSC associated with an abatement standard of 30. Based solely on the relative values of TSB and TSC, can you state definitively whether this abatement level is efficient? Explain.
b. Find the efficient level of pollution abatement (AE).
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Related Book For
Environmental Economics and Management Theory, Policy and Applications
ISBN: 978-1111826673
6th edition
Authors: Scott J. Callan, Janet M. Thomas
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