3. New source performance standards. Suppose New Mexico's NOT abatement standard for existing sources is 6 units, and EPA's standard for new sources is 19 units. Let the two types of sources face the following MAC functions, where each MAC is in thousands of dollars: MACexisting 1.8Aexisting MACnew = 1.2Anew Is abatement under these separate standards cost effective? Explain your reasoning. If not, what levels of abatement for new and existing facilities would achieve the same total abatement (25) and be cost effective? 1

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
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Chapter1: Making Economics Decisions
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3. New source performance standards. Suppose New Mexico's NOT abatement standard for existing
sources is 6 units, and EPA's standard for new sources is 19 units. Let the two types of sources face
the following MAC functions, where each MAC is in thousands of dollars:
MACexisting
1.8Aexisting
MACnew = 1.2Anew
Is abatement under these separate standards cost effective? Explain your reasoning. If not, what levels
of abatement for new and existing facilities would achieve the same total abatement (25) and be cost
effective?
1
Transcribed Image Text:3. New source performance standards. Suppose New Mexico's NOT abatement standard for existing sources is 6 units, and EPA's standard for new sources is 19 units. Let the two types of sources face the following MAC functions, where each MAC is in thousands of dollars: MACexisting 1.8Aexisting MACnew = 1.2Anew Is abatement under these separate standards cost effective? Explain your reasoning. If not, what levels of abatement for new and existing facilities would achieve the same total abatement (25) and be cost effective? 1
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