4. Marginal private benefit of pollution abatement (MPBA), marginal social benefit of pollution abatement (MSBA) and marginal

Question:

4. Marginal private benefit of pollution abatement (MPBA), marginal social benefit of pollution abatement (MSBA) and marginal cost of pollution abatement (MCA) are as follows: MPBA=5-A MSBA 12-2A MCA=0.75A A is the level of pollution abatement. Calculate

a) the privately efficient pollution abatement,

b) the socially efficient pollution abatement, and

c) the Pigouvian tax.

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