Table 28.1 Reduction in Emissions MC to Reduce Emissions MC to Reduce Emissions (in tons) by...

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Table 28.1 Reduction in Emissions MC to Reduce Emissions MC to Reduce Emissions (in tons) by Steel Plant by Paper Plant $400

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Answer 1

Answer #1

QUESTION 28 :

SOLUTION : OPTION ( A ) would be correct here i.e., $ 600

As the govt commands each firm to reduce its emissions by the one ton each , then we have to calculate Total cost .

TOTAL COST is the Submission of MARGINAL COST .i.e., TC = $\sum$ MC

Here , only one unit of reduction in emission contains marginal cost of $ 400 in the steel plant & $ 200 in the paper plant .

Hence, total cost will be = $ 400 + $ 200 = $ 600 .

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Answer 2

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