3. The EPA wants to reduce emissions of sulfur dioxides from electric power-generating plants by 20 percent during the next year. To achieve this goal, the EPA will require each power-generating plant in the nation to reduce emissions by 100 tons per year. Suppose five power plants emit sulfur dioxides and serve a given metropolitan area. The following table shows the cost per ton of reducing emissions for each of the five plants: COST PER TON OF PLANT 1 2 3 4 5 EMISSIONS REDUCTION ($) a. Cost of meeting EPA regulations. 600 500 500 400 200 Assuming that the cost per ton of emissions reduction is constant and that the improvement in the air for the metropolitan area is the same no matter which plant reduces emissions, calculate the following: b. Least-cost method of achieving the EPA goal of reducing emissions of sulfur dioxides from power plants in the metropolitan area.

3. The EPA wants to reduce emissions of sulfur dioxides from electric power-generating plants by 20 percent during the next year. To achieve this goal, the EPA will require each power-generating plant in the nation to reduce emissions by 100 tons per year. Suppose five power plants emit sulfur dioxides and serve a given metropolitan area. The following table shows the cost per ton of reducing emissions for each of the five plants: COST PER TON OF PLANT 1 2 3 4 5 EMISSIONS REDUCTION ($) a. Cost of meeting EPA regulations. 600 500 500 400 200 Assuming that the cost per ton of emissions reduction is constant and that the improvement in the air for the metropolitan area is the same no matter which plant reduces emissions, calculate the following: b. Least-cost method of achieving the EPA goal of reducing emissions of sulfur dioxides from power plants in the metropolitan area.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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[4] At their choice of emissions after trading permits, what is each firm’s total abatement cost? Firm 1’s Total Abatement Cost ___________ Firm 2’s Total Abatement Cost ___________ [5] Alternatively, what could the regulator choose for an emissions tax to achieve the goal of 25 units in a cost-effective manner?