Suppose the government realizes that water usage has skyrocketed because water consumption is unregulated and firms are free to consume as they please. For example, due to climate change farmers had to increase crop irrigation, depleting water tables to historically low levels. Suppose the following total cost function (TC) and total benefits function (TB): T C(q) = 2q T B(q) = 40q 5q2 (a) Derive the average benefit, the marginal benefit and the marginal cost function. (b) What is the quantity of water being consumed by the public when water consumption is unregulated? What is the optimal quantity consumed?

(c) What are some of the consequences of having unregulated water consumption?