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Suppose that two firms, X and Y, face the following abatement costs: МАСх3D 1.2Aҳ, TACX = 0.6AX2 0.15AY2 МАСу3D 0.3Аү TACY= Further assume that the combined abatement standard is 40 units for

Suppose that two firms, X and Y, face the following abatement costs: МАСх3D 1.2Aҳ, TACX = 0.6AX2 0.15AY2 МАСу3D 0.3Аү TACY= Further assume that the combined abatement standard is 40 units for

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Suppose that two firms, X and Y, face the following abatement costs: MACX = 1.2Ax, MACY = 0.3AY TACX = 0.6AX2 0.15AY? TACY= Further assume that the combined abatement standard is 40 units for both firms. Use this model to answer Question 1, 2 and 3 Based on this model, if the government uses a uniform standard A. the total abatement cost for firm X is $24 B. the total abatement cost for firm Y is $12 C. the combined total abatement cost for both firms is $1,200 D. the combined total abatement cost for both firms is $300 According to this model, if the government uses a uniform standard A. firm Y would face a marginal abatement cost that is higher than that for firm Y B. that standard would achieve a cost-effective solution C. firm Y should do more of the abating and firm X should do less to move closer to a cost- effective solution D. firm X's marginal abatement cost would be $48, and firm Y's marginal abatement cost would be $12 Based on the model given, the cost-effective solution would arise if A. each firm abates 20 units of pollution B. firm X abates 8 units, and firm Y abates 32 units C. firm Y does all the abating because its MAC is lower D. firm X abates 24 units, and firm Y abates 16 units
Transcribed Image Text:Suppose that two firms, X and Y, face the following abatement costs: MACX = 1.2Ax, MACY = 0.3AY TACX = 0.6AX2 0.15AY? TACY= Further assume that the combined abatement standard is 40 units for both firms. Use this model to answer Question 1, 2 and 3 Based on this model, if the government uses a uniform standard A. the total abatement cost for firm X is $24 B. the total abatement cost for firm Y is $12 C. the combined total abatement cost for both firms is $1,200 D. the combined total abatement cost for both firms is $300 According to this model, if the government uses a uniform standard A. firm Y would face a marginal abatement cost that is higher than that for firm Y B. that standard would achieve a cost-effective solution C. firm Y should do more of the abating and firm X should do less to move closer to a cost- effective solution D. firm X's marginal abatement cost would be $48, and firm Y's marginal abatement cost would be $12 Based on the model given, the cost-effective solution would arise if A. each firm abates 20 units of pollution B. firm X abates 8 units, and firm Y abates 32 units C. firm Y does all the abating because its MAC is lower D. firm X abates 24 units, and firm Y abates 16 units
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