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The town of Lumberville has a pulp and paper factory that produces air pollution. The marginal damage to the community is given by h)=3e, where
The town of Lumberville has a pulp and paper factory that produces air pollution. The marginal damage to the community is given by h)=3e, where e is the level of emissions from the factory. To reduce its emissions, the pulp and paper factory would face marginal abatement costs of MAC=2G-2e. Suppose the factory's emission levels are currently unregulated. Using a graph with dollars on the vertical axis and e on the horizontal axis, answer the following questions: If the factory's emission levels were reduced to the efcient level, the gain in net social welfare to the town of Lumberville would be $ Suppose the town of Lumberville were to enact a liability law that required the factory to pay for any environmental damages it caused. The amount of damage payments the factory would choose to pay under the liability law would be 15
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