Final answer:
The efficient level of pollution is found where the marginal damage (MD) equals the marginal cost (MC) of cleanup. Here, solving MD(x) = 2x and MC(x) = 60 - x indicates that the efficient level is at x = 20 units of pollution.
Step-by-step explanation:
The student's question involves analyzing the marginal cost (MC) and marginal damage (MD) of pollution to determine the market level of pollution without any regulation and the efficient level of pollution. The MD function is given by MD(x) = 2x, indicating that the marginal damage increases linearly with the level of pollution, x. On the other hand, the MC function is MC(x) = 60 - x, implying the marginal cost of cleanup decreases as the level of pollution increases, which is opposite to typical marginal cost behavior described in the reference figures. To find the market level of pollution without regulation, we would typically set MD equal to zero, since the firm does not take into account the damage its pollution causes.
However, this would result in infinite pollution, which is not a realistic scenario. Instead, we'll solve for the efficient level of pollution, which occurs where MD equals MC. This is the point where the additional cost of reducing pollution equals the additional damage caused by pollution. Setting MD(x) equal to MC(x), we have: 2x = 60 - x. Solving this equation gives us x = 20. At this level of pollution, the marginal cost of cleanup is equal to the marginal damage of pollution, which would be the socially optimal level of pollution from an economic perspective. Without specific numbers for the actual costs, we cannot determine the actual market level of pollution without dividing into further economic analysis.