(Total: 36 pts) Suppose a chemical factory discharges waste
product into a river resulting in significant damages to a local
fishery. The marginal damage to the fishery (measured in terms of
the value of lost fish stocks) is represented by the equation: MD =
10E The chemical factory can reduce its effluent flows by treating
its waste products. Its marginal abatement cost (MAC) function is
given by the equation: MAC = 1,200 - 5E.
a) (8pts) What level of emissions will occur if the chemical
factory is not regulated? What would the total abatement costs for
the chemical factory be if emissions are controlled and reduced to
zero?
b) (4pts) If no liability laws are in place, what damages will the
chemical factory inflict on the fishery?
(Total: 36 pts) Suppose a chemical factory discharges waste product into a river resulting in significant...
(Total: 36 pts) Suppose a chemical factory discharges waste product into a river resulting in significant damages to a local fishery. The marginal damage to the fishery (measured in terms of the value of lost fish stocks) is represented by the equation: MD = 10E The chemical factory can reduce its effluent flows by treating its waste products. Its marginal abatement cost (MAC) function is given by the equation: MAC = 1,200 - 5E. d) (8pts) If the chemical factory...