Examine the following marginal costs and marginal benefits associated with air cleanliness in a given locale:
Quantity of Clean Air (%) Marginal Cost ($) Marginal Benefit ($)
0 50,000 600,000
20 150,000 360,000
40 200,000 200,000
60 300,000 150,000
80 400,000 120,000
100 Infinite 0
What is the optimal degree of air cleanliness?
What is the optimal degree of air pollution?
Suppose that a state provides subsidies for a company to build plants that contribute to air pollution. Cleaning up this pollution causes the marginal cost of air cleanliness to rise by $210,000 at each degree of air cleanliness. What is the optimal degree of air cleanliness after this change?