Show all work. Draw graphs to explain your answers. The correct answers will include areas on the graph and dollar values. Suppose a chemical factory discharges waste products into a river resulting in significant damages to a local fishery. The marginal damage to the fishery (measured in terms of the value of lost fish stocks) is represented by the equation:MDC = 10E The chemical factory can reduce its effluent flows by treating its waste products. Its marginal abatement cost (MAC) function is given by the equation: MAC = 1,200 - 5E.What level of emissions will occur if the chemical factory is not regulated? What would the total abatement costs for the chemical factory be if emissions are controlled and reduced to zero? If no liability laws are in place, what damages will the chemical factory inflict on the fishery? (Hint: find TDC) If the government puts in place a liability law that requires the chemical factory to compensate the fishery for the damages it causes, what level of emissions will take place and what are the total costs of compliance for the chemical company?

Abatement cost: Abatement costs are the costs of getting rid of bad byproducts that are made during…

Answered: Show all work. Draw graphs to explain…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Show all work. Draw graphs to explain your answers. The correct answers will include areas on the graph and dollar values. Suppose a chemical factory discharges waste products into a river resulting in significant damages to a local fishery. The marginal damage to the fishery (measured in terms of the value of lost fish stocks) is represented by the equation:MDC = 10E The chemical factory can reduce its effluent flows by treating its waste products. Its marginal abatement cost (MAC) function is given by the equation: MAC = 1,200 - 5E.

What level of emissions will occur if the chemical factory is not regulated? What would the total abatement costs for the chemical factory be if emissions are controlled and reduced to zero?
If no liability laws are in place, what damages will the chemical factory inflict on the fishery? (Hint: find TDC)
If the government puts in place a liability law that requires the chemical factory to compensate the fishery for the damages it causes, what level of emissions will take place and what are the total costs of compliance for the chemical company?

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