Update the graph below to illustrate the efficient level of emissions if new technologies allow polluting firms to abate emissions at a lower cost. Clearly show which curve(s) change and denote the new efficient level of emissions as E4.

Update the graph below to illustrate the efficient level of emissions if new technologies allow polluting firms to abate emissions at a lower cost. Clearly show which curve(s) change and denote the new efficient level of emissions as E4.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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True/False: Suppose there are two polluting firms that have different marginal abatement cost curves, MCA1 and MCA2. Any combination of pollution abatement levels, A1 for firm 1 and A2 for firm 2, that minimizes the total cost of abatement will also produce the allocatively efficient level of total abatement AE. Explain. Credit is given for the thoroughness of the explanation. Include a graph in your answer.
The marginal benefit of reducing pollution and the marginal cost of reducing pollution are given by the following equations: MB = -2U2 + 18, and MC = 2U2 + 2, where U is the number of units of pollution abatement. What is the optimal number of units of pollution abatement? A) o B) 1 C) 2 D) 3 E) 4
Imagine a firm’s marginal abatement cost function with existing technologies is: MAC = 8 – E. If the firm adopts new pollution abatement technologies, its marginal abatement cost function will be: MAC = 4 – 0.5E. With a tax on emissions of $2, the benefits of adopting the new technologies equal:Select one:a. $4.b. $10.c. $2.d. $8.
Find Pure Strategy Nash equilibirum then use following values for emissions.
Provide a reason why the marginal damages from some emissions may be increasing with the level of emissions (like in the figure above). Suppose the unregulated level of emissions is E3. What area(s) represent the total damages from unregulated emissions? Suppose emissions levels drop from E3 to E1. What area(s) represent the total benefits from the emissions reduction from E3 to E1? What point denotes the marginal damage from emissions at E2?
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MAC_1 = 11 - 2E 1 MAC 2 = 8.5 E_2, and assume marginal external damages ( MED) from the aggregate emissions of both firms (E_Agg E_1 + E_2) is: MED = .5 E_Agg. To achieve the socially efficient level of aggregate emissions (E*_Agg), the government institutes a per- unit tax on emissions. With this tax, the total amount of tax revenue raised is $ =
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