Suppose the government aims to abate 20 tons ofpollution from two firms. Firm 1's abatement costfunction is MAC1 = A1, firm 2's abatement function isMAC2 = 4A2, where A1 and A2 represent the amountof abatement conducted by firm 1 and firm 2individually. How many tons should firm 1 and firm 2abate to minimize total abatement cost? Blank #1: Firm1's amount of abatement Blank #2 : Firm 2's amount ofabatement

Marginal Abatement Cost (MAC) represents the cost associated with eliminating an additional unit of…

Answered: individually. How many tons should firm…

individually. How many tons should firm 1 and firm 2 abate to minimize total abatement cost? Blank #1: Firm 1's amount of abatement Blank #2 : Firm 2's amount of abatement

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Suppose the government aims to abate 20 tons of
pollution from two firms. Firm 1's abatement cost
function is MAC1 = A1, firm 2's abatement function is
MAC2 = 4A2, where A1 and A2 represent the amount
of abatement conducted by firm 1 and firm 2
individually. How many tons should firm 1 and firm 2
abate to minimize total abatement cost? Blank #1: Firm
1's amount of abatement Blank #2 : Firm 2's amount of
abatement

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Step 1: Understand the Concept of Marginal Abatement Cost

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Step 2: Identify the Marginal Abatement Cost Functions

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Step 3: Set Up the Total Abatement Requirement

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Step 4: Apply the Equal Marginal Principle

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Step 5: Solve for the Optimal Abatement Amounts

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