Suppose economists estimate the following cost and benefit functions associated with the 1990 Clean Air Act Amendments:
TSB = 75 A – 0.4 A²
TSC = 25 A + 0.85 A²
where A represents the percent of pollution abatement, and costs and benefits are measured in millions of dollars. Find TSB and TSC associated with an abatement standard of 30. Based solely on the relative values of TSB and TSC, can you state definitively whether this abatement level is efficient? Explain.

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06-06-2024
Business

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Suppose economists estimate the following cost and benefit functions associated with the 1990 Clean Air Act Amendments:
TSB = 75 A – 0.4 A²
TSC = 25 A + 0.85 A²
where A represents the percent of pollution abatement, and costs and benefits are measured in millions of dollars. Find TSB and TSC associated with an abatement standard of 30. Based solely on the relative values of TSB and TSC, can you state definitively whether this abatement level is efficient? Explain.

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