What is the optimal pollution level w

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Reference no: EM133897184

Assignment:

A firm's pollution problem is identified by the following two functions:

MDC = 2W-2, if W≥1, MDC = 0, if 0≤W≤1

MAC=10-W

a. What is the optimal pollution level W*? Explain carefully why pollution level other than W* cannot be optimal.

b. Instead of W, introduce pollution reduction level(R) and redefine the above two functions accordingly. What is the optimal pollution reduction level R*? What is the relationship between W* and R*?

I really do not get how to transform from w to r. Do I have to identify the limits of w first to get to r or how do I proceed?

Reference no: EM133897184

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