Because the NAAQS are set using a benefit-based decision rule, find the abatement level of sulfur dioxide that would adhere to this rule.
Suppose that the MSB and MSC of abating sulfur dioxide are as follows. Use these functions to answer parts (a) and (b) below.
MSB = 32 – 0.2A MSC= 16 + 0.2A
A benefit-based rule is one that ignores associated costs and instead maximizes total benefits. The maximum level of TSB occurs at the point where MSB equals zero. Hence, to find the benefit-based level of abatement, set MSB equal to zero, and solve for A.
MSB = 32 – 0.2A
0 = 32 – 0.2A
0.2A = 32
A = 160 units
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