For the purpose of these exercises, let the firm's profits be given by P(x) = 20x - x^2, and let damages be given by D(x) = 2x^2.
Under these situations find:
Level of output x, Producer surplus and net damages
A regulator imposes a unit Pigovian tax on pollution at the level t=2 per unit.
Same as (3), but the government returns to tax revenues collected to the consumers