(Answered) Suppose the following are the msb and msc functions for psd

Economics

Suppose the following are the MSB and MSC functions for PSD and nonattainment areas in Denver, Colorado:

PSD: MSBPSD = 30 - 0:2A MSCPSD = 12 þ 0:1A
NON: MSBNON = 34 - 0:3A MSCNON = 18 þ 0:2A
where A is the level of abatement in each region.

a. Find the efficient abatement level for each area, i.e., APSD and ANON. Based on these results, are the differentiated standards for PSD areas sup- ported on efficiency grounds? Briefly explain why or why not.

b. Is the relationship between MSBPSD and MSBNON reasonable based on the legislated distinction between PSD areas and nonattain- ment areas? Briefly explain.

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