Two companies, a paper mill and an oil refinery, dump gunk into a bay. Each company currently dumps 10 tons of gunk per day. The gunk kills fish and reduces the catch for the fishing industry in the area. The following table provides information on the marginal and total costs and benefits to the companies and the fishing industry (in thousands of dollars) from reducing different quantities of gunk. 

Paper mill		Oil refinery		Fishing
Tons of gunk reduced	Total cost	Marginal cost	Total cost	Marginal cost	Total profit	Marginal profit
0	0	n/a	0	n/a	100.00	n/a
1	0.20	0.20	2.50	2.50	120.00	20.00
2	0.70	0.50	5.25	2.75	134.00	14.00
3	1.60	0.90	8.25	3.00	144.00	10.00
4	3.00	1.40	11.50	3.25	151.00	7.00
5	5.00	2.00	15.00	3.50	156.50	5.50
6	7.70	2.70	18.75	3.75	161.00	4.50
7	11.20	3.50	22.75	4.00	164.75	3.75
8	15.70	4.50	27.00	4.25	168.00	3.25
9	24.70	9.00	31.50	4.50	171.00	3.00
10	42.70	18.00	36.25	4.75	173.75	2.75

The marginal profit to the fishing industry is 2.50 for each additional ton of gunk removed beyond 10 tons (i.e., the 11-20 tons removed).

1. Suppose the town decides to tax each ton of gunk dumped at 2.85 (and give all tax revenue to the fishing industry). How many tons to gunk does each company reduce, and how many tons do they continue to dump? What are the costs of reduction by each company, and how much do they pay in taxes? What is the increase in profits for the fishing industry?

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