Q2B. i) Consider two marginal abatement cost curves (MAC) for a single firm. MAC, represents the current condition with old technology, MAC₂ refers to abatement costs that the firm would experience after engaging in a relatively expensive research and development (R&D) program to develop a new method of reducing emissions. Show how the price of permit works as an incentive for firm to improves it's technology and reduce it's emission? Explain. [show by measuring (e.g. addition or subtraction) areas under the curves). ii) Consider a simple model of emission control of an economy. Assume, the shape of marginal damages (MD), and marginal abatement cost (MAC) curves are typical, Show how you can introduce a two-part emission charge (taxes) system to reduce the burden of firm's tax payments. [show by measuring (e.g. addition or subtraction) areas under the curves].

Q2B. i) Consider two marginal abatement cost curves (MAC) for a single firm. MAC, represents the current condition with old technology, MAC₂ refers to abatement costs that the firm would experience after engaging in a relatively expensive research and development (R&D) program to develop a new method of reducing emissions. Show how the price of permit works as an incentive for firm to improves it's technology and reduce it's emission? Explain. [show by measuring (e.g. addition or subtraction) areas under the curves). ii) Consider a simple model of emission control of an economy. Assume, the shape of marginal damages (MD), and marginal abatement cost (MAC) curves are typical, Show how you can introduce a two-part emission charge (taxes) system to reduce the burden of firm's tax payments. [show by measuring (e.g. addition or subtraction) areas under the curves].

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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