Produce in absence of pollution regulation

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Profit associated with polluting for Friedman Inc are 40Q-2Q2 ,where Q=pollution emitted (in tons) and profit are measured in dollars. Marginal benefit of polluting, derived from this function are MB =40-4Q. Questions: (a) how much pollution do you expect Freidman Inc. to produce in absence of pollution regulation? (b) The damage costs associated with pollution from Freiedman are estimated as Damages =D=3Q2 where damages are measured in dollars. What are the damage costs associated with Friedman' unregulated level of polluting ? What are the net benefits at this point? (c) the marginal damages associated with that function are MD = 6Q what is the efficient level of pollution? What are total benefit and cost at the efficient level of pollution? What is the level of net benefit at this point? (d) what are the marginal benefit and costs at the efficient level of pollution?(e) suppose that the damage affect only one person , Samuelson ,and Friedman has a clear right to emit as much as it likes. Samuelson and Friedman can negotiate at no cost. With no government regulatory, how much do you expect the firm to pollute? Why?

Reference no: EM131009601

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