Every 1 percent reduction in the level of particulates in the air costs $200,000. Low-income residents in a region have a demand for particular reduction of R=10-p (R is the level of particulate reduction and P is the price per 1 percent reduction). High-income residents have a demand for particulate reduction of R=40-2P.
a. Is reduction of the level of particular a public or private good?
b. What will the market demand for particulate reduction be?
c. What is the optimal level of particulate reduction?