Consider the following benefit and cost functions for the abatement level (A) necessary to achieve the maximum contaminant level (MCL) for some identified drinking water pollutant.
TSB = 45A - 0.25A2 TSC = 24A + 0.10A2
MSB = 45 - 0.5A MSC = 24 + 0.2A
where all benefit and cost values are measured in millions of dollars, and A is measured in percent.
a. Using the pre-1996 benefit-based criterion for drinking water standards, find the level of abatement that will maximize total social benefits (TSB).
b. Based on the benefit-cost criterion in the 1996 SDWA, find the maximum level of abatement that will ensure positive net benefits.
c. What level of abatement will maximize the net social benefits?