Following are the marginal abatement costs of three firms . Suppose each firm is currently emitting 10 tons / week , so the total emissions are 30 tons / week . Suppose we wish to reduce total emissions by 50 % , to 15 tons per week . The following table provides marginal abatement costs for each firm .   a ) What is the total cost if each firm cuts total emission by 50 % from their current levels .   b ) What is the total cost if the total emissions decrease by 50 % ( to 15 tons per week ) that meets the equi - marginal principle .   c ) From the society's point , which method of reducing ( a or b above ) emissions is better ? Provide a reason .

Consider an industry with two firms that emit a uniformly mixed air pollutant (e.g., carbon dioxide). The marginal abatement cost functions for Firm 1 and Firm 2 are: MAC1 = 100 - e1 MAC2 = 100 - 4e2 Aggregate emissions for the industry are denoted as E = e1 + e2. 1. In an unregulated environment how many units of emissions does each firm emit?             Firm 1’s unregulated level of emissions ____________             Firm 2’s unregulated level of emissions ____________             Total unregulated level of emissions ______________ Suppose a regulator has a goal of reducing the total level of emissions from the amount from the amount you answered in [1] to 25 units. The regulator would like to achieve the goal of 25 units of total emissions in a cost-effective way. To do so it issues 25 permits, 10 are given to Firm 1 and 15 are given to Firm 2. A firm can only emit a unit of pollution if they have a permit for that unit, otherwise they must abate. After the permits are allocated,…

Consider a firm that emits pollution into the air. Suppose that the marginal damage costs associated with the emissions are given by MDC -15+ 4 c, where e is the quantity of the emissions. The firm's marginal costs of abatement are given by (a) (b) 390 (c) MAC 1200 - 20 c. Determine the quantity of emissions that the firm would discharge in the absence of government policy. Determine the socially efficient level of emissions. Calculate the total costs to society for both a and b and draw a diagram illustrating these costs.

Consider a market with two polluting firms with linear marginal abatement cost curves.  Firm B has increasing marginal abatement costs that are everywhere half as high as Firm A’s marginal abatement costs.  The maximum amount of pollution that can be tolerated is less than the total these two firms would emit if their pollution was unrestricted. Thus some aggregate amount of abatement is necessary.  The pollutant in question is uniformly mixing, so it doesn’t matter which firm cuts back how much, only that between them, they cut back by the required total amount. The environmental agency decides to solve the abatement allocation problem by giving out pollution permits in amounts such that each firm would be obliged to cut back their emissions by an equal amount. Would this be “fair”?  Would it be “efficient”?