What is the optimal level of pollution reduction

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Reference no: EM131242550

The marginal damage averted from pollution cleanup is MD = 200 − 5Q. The marginal cost associated with pollution cleanup is MC = 25 + 2Q.

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: EM131242550

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