Based on this information, what would be the national standard for an allocatively efficient abatement?
Hypothetically, suppose a recent study of hazardous waste abatement (A) arrives at the following national estimates for abating chemical solvents: MSB = 100 – 0.75A and MSC = 20 + 0.50A, where A is measured in millions of tons per year, and costs are measured in millions of dollars.
Allocative efficiency occurs at the point where MSB equals MSC. So to find the solution, simply set the two equations equal, and solve for A as follows:
MSB = MSC
100 – 0.75A = 20 + 0.50A
Solving: 80 = 1.25A
Or: A = 64 million tons
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