a. What level of emissions does cach firm choose? Explain how they respond to the emissions tax. b. What are cach firm's total compliance costs? Show your work. c. What is the total level of abatement? Discuss whether this abatement is achieved at the least cost for society.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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2. (
an industry. The industry is regulated with an emission tax of $6.
) The table below gives the marginal abatement costs of three polluting firms in
Marginal abatements costs ($/ton)
Emissions
(tons/week) Firm 1 Firm 2 Fim 3
10
0 0
3
2
12
3
18
4.
5
10
24
4
12
36
6.
3
14
60
18
72
8.
23
84
29
108
10
a. What level of emissions does each firm choose? Explain how they respond to the emissions
tax.
b. What are each firm's total compliance costs? Show your work.
c. What is the total level of abatement? Discuss whether this abatement is achieved at the least
cost for society.
42TO
Transcribed Image Text:2. ( an industry. The industry is regulated with an emission tax of $6. ) The table below gives the marginal abatement costs of three polluting firms in Marginal abatements costs ($/ton) Emissions (tons/week) Firm 1 Firm 2 Fim 3 10 0 0 3 2 12 3 18 4. 5 10 24 4 12 36 6. 3 14 60 18 72 8. 23 84 29 108 10 a. What level of emissions does each firm choose? Explain how they respond to the emissions tax. b. What are each firm's total compliance costs? Show your work. c. What is the total level of abatement? Discuss whether this abatement is achieved at the least cost for society. 42TO
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