What is the optimal level of pollution reduction

Reference no: EM13290308

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?

Reference no: EM13290308

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