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The marginal abatement (control) costs for two air pollutants sources that affect a single receptor are...

The marginal abatement (control) costs for two air pollutants sources that affect a single receptor are MAC1 = $0.6 q1 and MAC2 = $1.0q2, where q1 and q2 are emissions abated. Their respective transfer coefficients are a1 = 3.0 and a2 = 2.0. Without any control, they would each emit 20 units of emissions each. The ambient standard is 24 ppm.

I. If an ambient permit system were established, how many permits would be issued and what price would prevail?

II. How much would each source spend on permits if they were auctioned off?How much would each source ultimately spend on permits if each source were initially given free of charge, exactly half of the total permits?

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