Suppose the following are theMSB andMSC functions for PSD and nonattainment areas in Denver, Colorado:

PSD:MSBPSD = 30 ? 0.2A NON:MSBNON = 34 – 0.3A

MSCPSD = 12 + 0.1A MSCNON = 18 + 0.2A

where Ais the level of abatement in each region.

  1. Find the efficient abatement level for each area, i.e.,APSD andANON. Based on these results, are the differentiated standards for PSD areas supported on efficiency grounds? Briefly explain why or why not.

  2. Is the relationship betweenMSBPSD andMSBNON reasonable based on the legislated distinction between PSD areas and nonattainment areas? Briefly explain.