Note that the fishery’s profits are a function of the TOTAL pollution in the system, that is, the sum of the gunk produced by both the mill and the refinery, while the cleanup costs for each polluter is a function only of its own waste.
a. Understanding the table:
· What is the marginal cost to the mill of cleaning up one additional ton of gunk if it has already cleaned up 5 tons/day?
· What is the marginal cost to the refinery of cleaning up one additional ton of gunk per day if it is currently cleaning up 5 tons/day?
· If both the mill and the refinery are cleaning up 5 tons/day, what is the marginal benefit to the fishery of the refinery cleaning up one more ton per day?