Firms A and B each produce 80 units of pollution. The federal government wants to reduce pollution levels. The marginal costs associated with pollution reduction are MCA = 50 + 3QA for firm A and MCB = 20 + 6QB for firm B, where QA and QB are the quantities of pollution reduced by each firm. Society's marginal benefit from pollution reduction is given by MB = 590- 3Qtot- where Qtot is the total reduction in pollution. The social optimum requires MB = MCA = MCg. Setting MCA =MCg and solving for QA in terms of Qg, we have QA = QB - Setting MCg = MB, plugging in for QA in terms of QB, and solving for Qg, 20 + 6Qg = 590 - 3Qtot = 590 - %3D 3(QA + QB) = QB. Hint: Type integers.

Firms A and B each produce 80 units of pollution. The federal government wants to reduce pollution levels. The marginal costs associated with pollution reduction are MCA = 50 + 3QA for firm A and MCB = 20 + 6QB for firm B, where QA and QB are the quantities of pollution reduced by each firm. Society's marginal benefit from pollution reduction is given by MB = 590- 3Qtot- where Qtot is the total reduction in pollution. The social optimum requires MB = MCA = MCg. Setting MCA =MCg and solving for QA in terms of Qg, we have QA = QB - Setting MCg = MB, plugging in for QA in terms of QB, and solving for Qg, 20 + 6Qg = 590 - 3Qtot = 590 - %3D 3(QA + QB) = QB. Hint: Type integers.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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