Ken’s firm is committed to reducing greenhouse gas by 10 tons per year. The firm’s cost of abating a ton of carbon is shown below: Quantity of Carbon Abated in tons Marginal Cost of Carbon Abatement 1 $3 2 $4 3 $5 4 $6 5 $7 6 $8 7 $9 8 $10 9 $11 10 $12 Ken also has the option to instead pay for a reforestation project that offsets a ton of carbon. Each reforestation project cost $7. What is the best combination of production abatement and reforestation abatement for Ken? How much money does Ken save byusing the reforestation abatement?
Ken’s firm is committed to reducing greenhouse gas by 10 tons per year. The firm’s cost of abating a ton of carbon is shown below: Quantity of Carbon Abated in tons Marginal Cost of Carbon Abatement 1 $3 2 $4 3 $5 4 $6 5 $7 6 $8 7 $9 8 $10 9 $11 10 $12 Ken also has the option to instead pay for a reforestation project that offsets a ton of carbon. Each reforestation project cost $7. What is the best combination of production abatement and reforestation abatement for Ken? How much money does Ken save byusing the reforestation abatement?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Ken’s firm is committed to reducing greenhouse gas by 10 tons per year. The firm’s cost of abating a ton of carbon is shown below:
|
Quantity of Carbon Abated in tons |
Marginal Cost of Carbon Abatement |
|
1 |
$3 |
|
2 |
$4 |
|
3 |
$5 |
|
4 |
$6 |
|
5 |
$7 |
|
6 |
$8 |
|
7 |
$9 |
|
8 |
$10 |
|
9 |
$11 |
|
10 |
$12 |
Ken also has the option to instead pay for a reforestation project that offsets a ton of carbon. Each reforestation project cost $7. What is the best combination of production abatement and reforestation abatement for Ken? How much money does Ken save byusing the reforestation abatement?
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