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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

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
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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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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