The marginal damage averted from pollution cleanup is MD = 200 5Q. The marginal cost associated

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The marginal damage averted from pollution cleanup is MD = 200 − 5Q. The marginal cost associated with pollution cleanup is MC = 25 + 2Q.

a. What is the optimal level of pollution reduction?

b. Show that this level of pollution reduction could be accomplished through taxation. What tax per unit would generate the optimal amount of pollution reduction?

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Public Finance And Public Policy

ISBN: 9781319105259

6th Edition

Authors: Jonathan Gruber

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Question Posted: Mar 17, 2024 06:00 AM

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The marginal damage averted from pollution cleanup is MD = 200 5Q. The marginal cost associated

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a To find the optimal level of pollution reduction we need to equate the marginal damage averted MD ...View the full answer

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