The marginal benefits of pollution reduction in tourist town


Two plants are emitting a uniformly mixed pollutant called the gunk into the beautiful sky over Tourist Town. The city government decides it can tolerate the total emission of no more than 100 kg of gunk per day. At a level of 25 the plant G has marginal reduction costs of 100 - 4x and is currently polluting while plant K has marginal reduction costs of 150 - y and currently pollutes at a level of 150.

Q: Assume the marginal benefits of pollution reduction in the Tourist Town are constant and equal to $64. Is 100 units of pollution obtained cost-effetely, an efficient level? If not, will efficiency be achieved through more or less pollution? Why?

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Macroeconomics: The marginal benefits of pollution reduction in tourist town
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