Question

Eeon 5:48: Homework 10 Names 1. Two manufacturers in the town of Gamecock emit a total of 40 tons (20 tons each) of a harmful toxin. The local government wants to limit the total pollution to 20 tons since health studies find no serious deleterious impacts on human health at these levels of pollution. Firm A's marginal cost of abatement is 5X and Firm B's marginal cost of abatement is 2x where X and Xare the tons of toxin abated by each firm. a. The government considers outright mandating abatement i. What is the total cost of abatement if the government mandates that Firm A abate 20 tons (such that Firm B would not have to abate)? il. What is the total cost of abatement if the government mandates that Firm B abate 20 tons (such that Firm A would not have to abate)? iii. What is the total cost of abatement if the government mandates each firm abate 10 tons?

Answer 1

Solution Page 1 4) Total cost of abatement can be obtained after integrating the marginal cost function MCA =58A Tc = fsx dx 50% When x220 - Tc=5(20) (20) : 1000 units 94) TC of abatement cost of fism B as Sax dx . *(**)) = x2 when abatement is by do units TC: 20x20 - 400 units each firem has 191) Total cost of abatement to abate 10 tons que, XA = X 8-10 5x9% +r? - (5(10)(10)/2 +10(10) = 250 +100 = 350 units ) At the marginal efficient allocation point, marginal abatement cost, fees bos population
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Below this tay sate, abatement cheaper than Paying tax , in und above this tax, fees are cheaper than abatement ... fiem dendes to abate at the point, Where T=MAC T = amount of tax As peu chega sule I have completed poutca), peut bli) and not imported blii) s blii).