Consider two firms with the following marginal abatement costs (MAC) as a function of emissions: MAC1 = 7 - E1 MAC2 = 14 - 2E2 %3D 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 tax on emissions, the government should set the tax equal to $.

Consider two firms with the following marginal abatement costs (MAC) as a function of emissions: MAC1 = 7 - E1 MAC2 = 14 - 2E2 %3D 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 tax on emissions, the government should set the tax equal to $.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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