Examine the following marginal costs and marginal benefits associated with air cleanliness for a firm:

Quantity of Clean Air (%) Marginal Cost ($) Marginal Benefit ($)

0 50,000 600,000

20 150,000 360,000

40 200,000 200,000

60 300,000 150,000

80 400,000 120,000

100 Infinite 0

A.What is the optimal degree of air cleanliness?

B.What would then be the optimal degree of air pollution?

C.Suppose that a state provides subsidies for companies to build plants that contribute to air pollution.Cleaning up this pollution causes the marginal cost of air cleanliness to rise by $210,000 at each degree of air cleanliness.What is the optimal degree of air cleanliness after this change?

D.Why would we not just want the quantity of pollution to be zero?