Problem
Assume that the uniform standard on TSDFs is associated with the following benefit and cost relationships:
TSB = 20Q - 0.1Q2 TSC = 8Q + 0.2Q2
MSB = 20 - 0.2Q MSC = 8 + 0.4Q
where dollar values are in thousands of dollars, and Q is the number of inspection procedures.
a. Because the standards on TSDFs are benefitbased, find the Q that maximizes TSB, and evaluate TSC and TSB at that level.
b. Show that an efficient standard would lower TSC and increase total net benefits.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.