EBK PRINCIPLES OF MICROECONOMICS (SECON
2nd Edition
ISBN: 9780393616149
Author: Mateer
Publisher: W.W.NORTON+CO. (CC)
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Chapter 14, Problem 11SP
To determine
Describe the answer based on given cost structure.
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a-c please
d-f
PART II: Multipart Problems wood or solem of triflussd aidi
1. Assume that a society has a polluting industry comprising two firms, where the industry-level
marginal abatement cost curve is given by: MAC = 24 - ()E and the marginal damage
function is given by: MDF = 2E.
What is the efficient level of emissions?
b. What constant per-unit emissions tax could achieve the efficient emissions level?
points)
c. What is the net benefit to society of moving from the unregulated emissions level to the
efficient level?
In response to industry complaints about the costs of the tax, a cap-and-trade program is
proposed. The marginal abatement cost curves for the two firms are given by:
MAC=24-E and MAC2 = 24-2E2.
d. How could a cap-and-trade program that achieves the same level of emissions as the tax
be designed to reduce the costs of regulation to the two firms?
Chapter 14 Solutions
EBK PRINCIPLES OF MICROECONOMICS (SECON
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