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$/cost 800- MDC (Globe) Moc (Anvil) MAC (Anur) *MDC (Globe)=-20+12e ★ MDC (Anvil) = -40+10e MAC (Anvil) = 750-2.3e 40 I 1 60 emissions The Marginal Abatement Costs of the firms in Anviliania can be represented by the equation MAC(Anvil.) = 750 - 2.3 e The Marginal Damage Costs to the residents of Anviliania are given by MDC (Anvil.) = - 40 + 10 e The Marginal Damage Costs to all residents (including the residents of Anviliania) are MDC (Globe) = -20 + 12 e a. Draw a diagram representing this situation. b. Determine the magnitude of the local market failure and the global market failure. c. Suppose that the Anvilianian government has given production subsidies to the firms in Anviliania. As a result, the firms have increased production (and the number of firms have increased.). Consequently, the aggregate MAC is now MAC' (Anvil.) = 800 - 2.3 e. Determine the magnitude of the intervention failure.

$/cost 800- MDC (Globe) Moc (Anvil) MAC (Anur) *MDC (Globe)=-20+12e ★ MDC (Anvil) = -40+10e MAC (Anvil) = 750-2.3e 40 I 1 60 emissions The Marginal Abatement Costs of the firms in Anviliania can be represented by the equation MAC(Anvil.) = 750 - 2.3 e The Marginal Damage Costs to the residents of Anviliania are given by MDC (Anvil.) = - 40 + 10 e The Marginal Damage Costs to all residents (including the residents of Anviliania) are MDC (Globe) = -20 + 12 e a. Draw a diagram representing this situation. b. Determine the magnitude of the local market failure and the global market failure. c. Suppose that the Anvilianian government has given production subsidies to the firms in Anviliania. As a result, the firms have increased production (and the number of firms have increased.). Consequently, the aggregate MAC is now MAC' (Anvil.) = 800 - 2.3 e. Determine the magnitude of the intervention failure.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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$/cost 800- MDC (Globe) Moc (Anvil) MAC (Anur) *MDC (Globe)=-20+12e ★ MDC (Anvil) = -40+10e MAC (Anvil) = 750-2.3e 40 I 1 60 emissions
Transcribed Image Text:$/cost 800- MDC (Globe) Moc (Anvil) MAC (Anur) *MDC (Globe)=-20+12e ★ MDC (Anvil) = -40+10e MAC (Anvil) = 750-2.3e 40 I 1 60 emissions
The Marginal Abatement Costs of the firms in Anviliania can be represented by the equation MAC(Anvil.) = 750 - 2.3 e The Marginal Damage Costs to the residents of Anviliania are given by MDC (Anvil.) = - 40 + 10 e The Marginal Damage Costs to all residents (including the residents of Anviliania) are MDC (Globe) = -20 + 12 e a. Draw a diagram representing this situation. b. Determine the magnitude of the local market failure and the global market failure. c. Suppose that the Anvilianian government has given production subsidies to the firms in Anviliania. As a result, the firms have increased production (and the number of firms have increased.). Consequently, the aggregate MAC is now MAC' (Anvil.) = 800 - 2.3 e. Determine the magnitude of the intervention failure.
Transcribed Image Text:The Marginal Abatement Costs of the firms in Anviliania can be represented by the equation MAC(Anvil.) = 750 - 2.3 e The Marginal Damage Costs to the residents of Anviliania are given by MDC (Anvil.) = - 40 + 10 e The Marginal Damage Costs to all residents (including the residents of Anviliania) are MDC (Globe) = -20 + 12 e a. Draw a diagram representing this situation. b. Determine the magnitude of the local market failure and the global market failure. c. Suppose that the Anvilianian government has given production subsidies to the firms in Anviliania. As a result, the firms have increased production (and the number of firms have increased.). Consequently, the aggregate MAC is now MAC' (Anvil.) = 800 - 2.3 e. Determine the magnitude of the intervention failure.
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