Question
Suppose we use our valuation tools and find the external cost of pollution is $110/ton. Michigan decides to impose an industrial pollution tax of $110/ton.
Suppose we use our valuation tools and find the external cost of pollution is $110/ton. Michigan decides to impose an industrial pollution tax of $110/ton. Nordman Industries emits pollution and has a marginal cost of reduction (MCR) with a slope of MCR = 40 + 2Q. Nordman Industries is a rational business and will adjust its emissions in response to the pollution tax. Solve for Q to find the optimal level of pollution reduction. Report your answer in the space below. Just report the number, not a decimal or label (tons). NOTE: the horizontal (x) axis should go from 0 to 100, not 10. The last zero got cut off in the diagram. It doesn't change the math though.
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