Consider two firms with the following marginal abatement cost (MAC) functions: MAC₁ = 12 - 2E₁ MAC2 = 8 - E₂ Assume that marginal external damages (MED) from the aggregate emissions of both firms (EA = E₁ + E₂) is: MED = 0.5EA- To achieve the socially efficient level of aggregate emissions (EA) using a per-unit subsidy to abatement, the government must set the subsidy equal to $ Please round your final answer to two decimal places if necessary.

Consider two firms with the following marginal abatement cost (MAC) functions: MAC₁ = 12 - 2E₁ MAC2 = 8 - E₂ Assume that marginal external damages (MED) from the aggregate emissions of both firms (EA = E₁ + E₂) is: MED = 0.5EA- To achieve the socially efficient level of aggregate emissions (EA) using a per-unit subsidy to abatement, the government must set the subsidy equal to $ Please round your final answer to two decimal places if necessary.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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