The marginal damage function for emissions of a chemical is given by MD = 4 + 0.3e. The marginal savings function for the polluter is given by MS = 40 - 0.5e.

a. Graph the MD and MS functions on a diagram and find the socially efficient level of emissions, e*.

b. What is the total abatement cost at e*? What is the amount of total damages at e*?

f. Show graphically that e* is the level of emissions that minimizes total social costs (sum of abatement and damage costs) by showing that at any other point, this total cost will be higher.