Question: The marginal damage averted from pollution cleanup is MD = 200 5Q. The marginal cost associated with pollution cleanup is MC = 10 +

The marginal damage averted from pollution cleanup is MD = 200 – 5Q. The marginal cost associated with pollution cleanup is MC = 10 + Q.
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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