What is the optimal level of particulate reduction

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Every 1 percent reduction in the level of particulates in the air costs $200,000. Low-income residents in a region have a demand for particular reduction of R=10-p (R is the level of particulate reduction and P is the price per 1 percent reduction). High-income residents have a demand for particulate reduction of R=40-2P.

a. Is reduction of the level of particular a public or private good?

b. What will the market demand for particulate reduction be?

c. What is the optimal level of particulate reduction?

Reference no: EM131104360

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