Plants A and B emit 12 tons and 6 tons of carbon dioxide (CO2), respectively. MAC(marginal abatement costs) for a = 12 - Ea, MACb=12-2Eb MD(marginal damage) = 1/3*E (E indicates CO2 emission) What is the social optimum for power plants A and B to reduce CO2 by some amount, and how much reduction cost each power plant bears?
Plants A and B emit 12 tons and 6 tons of carbon dioxide (CO2), respectively. MAC(marginal abatement costs) for a = 12 - Ea, MACb=12-2Eb MD(marginal damage) = 1/3*E (E indicates CO2 emission) What is the social optimum for power plants A and B to reduce CO2 by some amount, and how much reduction cost each power plant bears?
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter17: Externalities And The Environment
Section: Chapter Questions
Problem 10PAE
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Plants A and B emit 12 tons and 6 tons of carbon dioxide (CO2), respectively.
MAC(marginal abatement costs) for a = 12 - Ea, MACb=12-2Eb
MD(marginal damage) = 1/3*E (E indicates CO2 emission)
What is the social optimum for power plants A and B to reduce CO2 by some amount, and how much reduction cost each power plant bears?
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Wouldn't it be correct to say E=12, not 2E=12 for 12–(2/3)E=(1/3)E?
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