The cost of controlling emissions at a firm rises rapidly as the amount of emissions reduced increases. Here is a possible model: C(q) = 4200+ 90q² where q is the reduction in emissions (in pounds of pollutant per day) and C is the daily cost to the firm (in dollars) of this reduction. Government will pay subsides in the amount of $450 per pound for each pound of pollutant removed (q). For example, if you can remove q=3 pounds of pollutant, you will receive a subsidy of $450*3. How many pounds of pollutant should the firm remove each day in order to minimize Net Cost (Cost minus subsidy)?
The cost of controlling emissions at a firm rises rapidly as the amount of emissions reduced increases. Here is a possible model: C(q) = 4200+ 90q² where q is the reduction in emissions (in pounds of pollutant per day) and C is the daily cost to the firm (in dollars) of this reduction. Government will pay subsides in the amount of $450 per pound for each pound of pollutant removed (q). For example, if you can remove q=3 pounds of pollutant, you will receive a subsidy of $450*3. How many pounds of pollutant should the firm remove each day in order to minimize Net Cost (Cost minus subsidy)?
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter12: Environmental Protection And Negative Externalities
Section: Chapter Questions
Problem 5SCQ: Consider two approaches to reducing emissions of CO2 into the environment from manufacturing...
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