1. Consider a local power plant that emits sulfurdioxide into the air. The marginal private benefit of this power plant is given by MPB=100-Q. The marginal private costs are given by MPC=30. The marginal damage to other people is given by MD=0.5Q.

1. How much output is this power plant going to produce? Show your work.
2. What is the efficient level of output? Show your work.
3. What is the net welfare gain to society from moving from output in part (a) to optimal output in part (b)?
4. If the government were to use Pigovian tax, how much tax should be imposed per unit of output produced?
5. What is the total tax paid by the producer?