a) [4] Define the marginal damage cost function associated with pollution emissions. Assume the damage is only health related. Discuss how you would use one of the non-market valuation techniques to determine health damages from pollution in dollar terms. b) [4] Use marginal damage cost and marginal cost of pollution reduction diagrams with pollution emissions on the horizontal axis to explain how each of the following two situations could be optimal (efficient). The first situation is where the optimal amount of pollution emissions is zero. The second is where the optimal amount of pollution emissions is at maximum emissions. Give one real-world example of each type of situation. c) [4] Draw a marginal damage cost and marginal control cost diagram with pollution emissions on the horizontal axis. Label all axes and functions. In constructing your diagram assume the following things: i) the marginal damage function is fairly flat initially and only becomes very steep at very high levels of pollution and ii) the marginal control cost function increases lowly with the amount of pollution emissions reduced. Use this diagram to illustrate the pollution charge (tax) and associated level of pollution that would be considered efficient. In your diagram show clearly the total costs of pollution. d) [4] Redraw the diagram from c) and now add to it a different marginal damage cost function that becomes very steep at much lower levels of pollution than you originally supposed. Illustrate what the new optimal pollution charge and level of pollution should be. e) [3] From a regulator's (government's) point of view, discuss difficulties associated with using pollution taxes (charges) to control emissions when we have uncertainty about the exact location of the marginal damage cost function (as shown by c and d above).