A plant with a marginal abatement function described by MAC = 75-5E is polluting the town's water supply. Emissions are measured in tons per year. a) Government regulators propose that the company pay a tax equal to $30 per ton of emissions. How many tons will the firm abate when faced with this tax, and how much better off will it be compared to if it does no abating. b) Suppose that, instead of the tax, the government offers to pay the firm $30 for each ton of emissions it abates. How many tons will the firm abate, and how much better off will it be compared to if it does no abating? A c) If damages caused by the firm's emissions is described by the function MD = 5E, what tax rate would encourage the firm to abate to the socially efficient level of emissions? Compute the private and social compliance cost and the net benefit accruing to society from the socially efficient emissions tax.

A plant with a marginal abatement function described by MAC = 75-5E is polluting the town's water supply. Emissions are measured in tons per year. a) Government regulators propose that the company pay a tax equal to $30 per ton of emissions. How many tons will the firm abate when faced with this tax, and how much better off will it be compared to if it does no abating. b) Suppose that, instead of the tax, the government offers to pay the firm $30 for each ton of emissions it abates. How many tons will the firm abate, and how much better off will it be compared to if it does no abating? A c) If damages caused by the firm's emissions is described by the function MD = 5E, what tax rate would encourage the firm to abate to the socially efficient level of emissions? Compute the private and social compliance cost and the net benefit accruing to society from the socially efficient emissions tax.

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter14: Environmental Economics

Section: Chapter Questions

Problem 17SQ

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The figure below shows a single firm's marginal abatement cost when facing a per-unit emissions tax of t. Use the figure to answer the following questions: a. What area(s) represent the total abatement cost (TAC) of the firm under the tax b. What area(s) represent the total amount in taxes paid by the firm $ t a b ان 6 e1 e2 emissions
The table below shows...
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Que . 2 Do not copy and past this.question . Explain u . I give u thum