(Answered) Assume that the uniform standard on tsdfs is associated

Economics

Assume that the uniform standard on TSDFs is associated with the following benefit and cost relationships:

TSB = 20Q - 0.1Q2:
TSC = 8Q + 0.2Q2:
MSB = 20 - 0.2Q

MSC = 8 + 0.4Q

where dollar values are in thousands of dollars, and Q is the number of inspection procedures.

a. Because the standards on TSDFs are benefit- based, find the Q that maximizes TSB, and evaluate TSC and TSB at that level.

b. Show that an efficient standard would lower TSC and increase total net benefits.

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