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Daily level of pollution should be allowed

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Reference no: EM131467278

The marginal social costs and abatement costs of air pollution for a factory are given as:

MSC = -1121 + 22.5Q    MCA =  879 - 17.5Q, where Q = units of pollution per day, and MSC and MCA are measured in dollars. The factory is located in a small town that is currently setting community standards. You have been hired to perform the analysis requested below.

a.  If the community wishes to set a pollution standard for the factory, what daily level of pollution should be allowed?

b.  As an alternative, some members of the town council favor an emissions tax for the factory. If a tax is implemented, at what level should the tax be set?

Reference no: EM131467278

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