Parts a and b

For firm 1, the marginal private benefit of pollution equals MB, = 120 - 3q1. For firm 2, the marginal benefit of pollution equals MB2 = 80 - q2. Assume the marginal private cost of polluting is 0 in the absence of a tax. a. Some smart people have determined the socially optimal quantity of pollution is Q* = 52, where Q* = q1 + 92. Assuming pollution is efficiently allocated between the firms, how much does each firm emit? Hint: Think about how you would determine the socially optimal quantity using marginal analysis b. What tax results in 52 units of pollution