The following figure represents the Marginal Abatement Cost curves of two paper towel factories: Unbleached Factory, Number 1 and Bleached Factory, Number 2 in the figure. Their MAC functions are: MAC1 = 6-1.5E1 and MAC2 = 6-0.75E2 E1 and E2 are the emissions of the two firms in tonnes.
The following figure represents the Marginal Abatement Cost curves of two paper towel factories: Unbleached Factory, Number 1 and Bleached Factory, Number 2 in the figure. Their MAC functions are: MAC1 = 6-1.5E1 and MAC2 = 6-0.75E2 E1 and E2 are the emissions of the two firms in tonnes.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
![The following figure represents the Marginal Abatement Cost curves of two paper towel factories: Unbleached Factory, Number 1 and Bleached Factory, Number 2 in the
figure.
Their MAC functions are: MAC1 = 61.5E1 and MAC2 = 6 -0.75E2
E1 and E2 are the emissions of the two firms in tonnes.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F45e037fa-4069-4afd-b9e6-6fecd9bcf488%2Fd509cd4e-4294-40b5-9518-5080d8fd8f0d%2Ftjcn1kz_processed.png&w=3840&q=75)
Transcribed Image Text:The following figure represents the Marginal Abatement Cost curves of two paper towel factories: Unbleached Factory, Number 1 and Bleached Factory, Number 2 in the
figure.
Their MAC functions are: MAC1 = 61.5E1 and MAC2 = 6 -0.75E2
E1 and E2 are the emissions of the two firms in tonnes.
![Marginal Abatement Cost
6
5
3
2
1
0
0
0.5, 5.625
0.5 5.255.25
1
1, 4.5
1.5, 4.875
2,4.5
1.5, 3.75
2
2,3
2.5, 4.125
2.5, 2.25
3
3, 3.75
3, 1.5
units.
3.5, 3.375
4,3
3.5, 0.75
4
units.
MACS
4,0
4.5, 2.625
Emissions
5
The Government wishes to limit the aggregate emissions to 6 tonnes.
Calculate the following under a uniform standard:
(Type only one number in the blank, do not include units and include up to three decimal places)
Total Abatement Cost Bleached Towel Factory + Total Abatement Cost Unbleached Towel Factory = $
5, 2.25
Under $3 emissions tax:
Total Abatement Cost Bleached Towel Factory + Total Abatement Cost Unbleached Towel Factory = $
5.5, 1.875
6
6, 1.5
6.5, 1.125
7
7,0.75
7.5, 0.375
8
8,0
Now suppose that the government had instead chosen to introduce a cap and trade scheme with a total cap of 6 units and gives each firm permits of 3 units. Assume that the
firms act competitively. Answer the following using the Cap and Trade scheme:
Bleached Firm's emissions:
units.
Bleached Firm's purchase of permits:
Unbleached Firm's emissions:
TC Bleached firm + TC Unbleached firm = $
9
MAC 1
MAC 2](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F45e037fa-4069-4afd-b9e6-6fecd9bcf488%2Fd509cd4e-4294-40b5-9518-5080d8fd8f0d%2Faviq0ch_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Marginal Abatement Cost
6
5
3
2
1
0
0
0.5, 5.625
0.5 5.255.25
1
1, 4.5
1.5, 4.875
2,4.5
1.5, 3.75
2
2,3
2.5, 4.125
2.5, 2.25
3
3, 3.75
3, 1.5
units.
3.5, 3.375
4,3
3.5, 0.75
4
units.
MACS
4,0
4.5, 2.625
Emissions
5
The Government wishes to limit the aggregate emissions to 6 tonnes.
Calculate the following under a uniform standard:
(Type only one number in the blank, do not include units and include up to three decimal places)
Total Abatement Cost Bleached Towel Factory + Total Abatement Cost Unbleached Towel Factory = $
5, 2.25
Under $3 emissions tax:
Total Abatement Cost Bleached Towel Factory + Total Abatement Cost Unbleached Towel Factory = $
5.5, 1.875
6
6, 1.5
6.5, 1.125
7
7,0.75
7.5, 0.375
8
8,0
Now suppose that the government had instead chosen to introduce a cap and trade scheme with a total cap of 6 units and gives each firm permits of 3 units. Assume that the
firms act competitively. Answer the following using the Cap and Trade scheme:
Bleached Firm's emissions:
units.
Bleached Firm's purchase of permits:
Unbleached Firm's emissions:
TC Bleached firm + TC Unbleached firm = $
9
MAC 1
MAC 2
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