Exploring Economics
8th Edition
ISBN: 9781544336312
Author: Sexton
Publisher: Cengage
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Chapter 8, Problem 4P
To determine
A lighthouse is consider as a public good as it benefits many ship owners and in case if it benefits primarily those ships that go to a port nearby.
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G please!
4. Consider two polluting firms, with the marginal abatement costs of polluters 1 and 2,
respectively, equal to
MAC₁ = 20-E1
MAC2 = 12-E2
a. What is the unregulated level of pollution for each firm?
b. Assume policymakers have decided to cut the level of pollution in half. The way they
intend to accomplish this goal is to require both firms to cut their pollution in half. What
are the total costs of abatement from the policy? And how are these costs distributed
between the firms?
c. Is this uniform quota on emissions across firms the most cost-effective manner in which
to reduce emissions by 50%?
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