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Suppose there are two firms: Firm A and Firm B. These firms are each emitting 50...

Suppose there are two firms: Firm A and Firm B. These firms are each emitting 50 tons of pollution. Firm A faces marginal abatement cost MACA = 6A and Firm B faces marginal abatement cost MACB = 12A where A is tons of pollution abatement. The government wishes for the total amount of pollution to be 80 tons.

1. (1.5 points) 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)?

2. (1.5 points) 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)?

3. (1.5 points) What is the total cost of abatement if the government mandates each firm abate 10 tons?

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