am. 337. Imagine a firm’s marginal abatement cost function with existing technologies is: \[ \text{MAC} = 220 - 10E. \]If the firm adopts new pollution abatement technologies, its marginal abatement cost function will be: \[ \text{MAC} = 110 - 5E. \]If the government raises the tax on emissions from $20 to $40, the benefits of adopting the new technologies increase by $ ___.Select one:- a. $55.- b. $60.- c. $40.- d. $50.

Answered: Imagine a firm's marginal abatement…

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

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am. 337.

Imagine a firm’s marginal abatement cost function with existing technologies is:

\[ \text{MAC} = 220 - 10E. \]

If the firm adopts new pollution abatement technologies, its marginal abatement cost function will be:

\[ \text{MAC} = 110 - 5E. \]

If the government raises the tax on emissions from $20 to $40, the benefits of adopting the new technologies increase by $ ___.

Select one:
- a. $55.
- b. $60.
- c. $40.
- d. $50.

Expert Solution

Step 1: Defining abatement cost

The costs of eliminating undesirable by-products produced during production are called abatement costs. Governments levy abatement expenses to reduce negative environmental consequences, such as cleaning up pollutants after a spill.

The marginal abatement cost curve, commonly known as the MAC curve or MACC, is a method of calculating the cost-effectiveness of greenhouse gas emission reductions.

Initial MAC = 220 - 10E

New MAC = 110 - 5E

Initial tax = $20

New tax = $40

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