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What level of abatement will maximize net social benefits

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Reference no: EM13914812

Consider the following benefit and cost functions for the abatement level (A) necessary to achieve the maximum contaminant level (MCL) for some identified drinking water pollutant.

TSB = 45A - 0.25A2 TSC = 24A + 0.10A2
MSB = 45 - 0.5A MSC = 24 + 0.2A

where all benefit and cost values are measured in millions of dollars, and A is measured in percent.

a. Using the pre-1996 benefit-based criterion for drinking water standards, find the level of abatement that will maximize total social benefits (TSB).

b. Based on the benefit-cost criterion in the 1996 SDWA, find the maximum level of abatement that will ensure positive net benefits.

c. What level of abatement will maximize the net social benefits?

Reference no: EM13914812

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