Question
1. Los Angeles County has the worst urban air quality across all major metropolitan areas in the United States. Automobile emissions contribute significantly to this
1. Los Angeles County has the worst urban air quality across all major metropolitan areas in the United States. Automobile emissions contribute significantly to this problem. Assume the California Air Resources Board is considering whether to set a uniform emission standard or a regionally-based emission standard, where one standard is set for Los Angeles County and another for the rest of the state. Marginal social benefits (MSB) and marginal social costs (MSC) for the two regions have been estimated as follows:MSBabatement in LA County = MSBabatement in the rest of California = MSCabatement in all of California = 500 - 0.75A 150 - 0.25A 0.5A, where A is the level of abatement of automobile emissions, and MSB and MSC are in millions of dollars.
a. Graph the MSB and MSC functions on the same diagram. Show the regionally-based set of standards (ALA and AREMAINDER) that should be recommended toachieve allocative efficiency in each region. Find the numerical value of each standard.
b. A uniform abatement standard (AST) is also being considered across the State of California of 300 units. Use the criterion of allocative efficiency to support or refute this alternative.
please show clear graph and work
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