Define the term optimal pollution level.

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(a) Define the term optimal pollution level

(b) List two market based economic efficient policies for achieving optimal pollution levels

(c) Using a graph of marginal cost of pollution control and marginal benefit of reducing pollution (Marginal cost of damage):

(i) Show the optimal pollution level. (Label both axes of the graph and each curve drawn on your graph)

(d) With the aid of the graph, briefly explain why it is not economically efficient to control for pollution at:

(ii) Levels less than the optimal quantity of pollution (what happens when we control for one less unit of pollution than necessary).

(iii)Levels more than the optimal quantity of pollution (what happens when we control for one unit of pollution than necessary)

Reference no: EM131094646

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