1. If the College pursued its abatement target by directing each building manager to cut emissions in halffor their respective building, what is the total cost of abatement? 2. If the abatement were pursued with an on-campus carbon tax of$30, would there be the same level ofabatement? Show your work and/or explain. 3. If the goal of the college is to meet the abatement target from question 1, what is the appropriate taxrate? 4. If the appropriate tax rate is used (answer from Q3), how much money can be saved compared to thecommand & control approach described in question 1?
Suppose we are interested in reducing the carbon footprint associated with heating/cooling buildings oncampus. The functions below describe marginal costs ofCO2abatement (expressed as a function of pollution)for two buildings on the Hendrix College campus. These are hypothetical but are influenced by buildingcharacteristics like age, size, and types of usage. (This information is used for questions 1-4)
MCMills = 100−10xM
MCSLTC = 75−2.5xS
1. If the College pursued its abatement target by directing each building manager to cut emissions in halffor their respective building, what is the total cost of abatement?
2. If the abatement were pursued with an on-campus carbon tax of$30, would there be the same level ofabatement? Show your work and/or explain.
3. If the goal of the college is to meet the abatement target from question 1, what is the appropriate taxrate?
4. If the appropriate tax rate is used (answer from Q3), how much money can be saved compared to thecommand & control approach described in question 1?
To answer these questions, we need to consider the marginal costs of CO2 abatement for the two buildings and calculate the total cost of abatement and the appropriate tax rate.
Total Cost of Abatement: If the College pursues its abatement targets by directing each building manager to cut emissions in half for their respective building, we need to find the abatement levels for each building.
Abatement with an On-Campus Carbon Tax of $30: To determine if there is the same level of abatement with a $30 carbon tax, we need to compare the abatement cost to the cost of the tax.
Appropriate Tax Rate: To find the appropriate tax rate that would achieve the same level of abatement as the "cut emissions in half" approach, set the total abatement cost equal to the cost of the tax and solve for the tax rate.
Savings Compared to Command & Control Approach: To calculate the savings compared to the command and control approach (Question 1), subtract the total cost of abatement at the appropriate tax rate (Question 3) from the total cost of abatement in Question 1.
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