Question

marginal abatement cost curves for polluters 1 and 2 : MAC1=10-e1 and MAC2=8-e1.

* How much does polluter 1 and polluter 2 pollute
without government intervention?

* This level of pollution should be reduced by 50%.
What are the marginal and total abatement costs of polluters 1 and
2 if a command and control policy is applied?

* What is the optimal outcome, or which allocation of emissions minimize the abatement costs? Please calculate the total abatement costs for the economy.

Answer #1

Assume the following marginal abatement cost curves for
polluters 1 and 2 : MAC1=10-e1 and
MAC2=8-e1.
1. How much does polluter 1 and polluter 2 pollute without
government intervention?
2. This level of pollution should be reduced by 50%. What are
the marginal and total abatement costs of polluters 1 and 2 if a
command and control policy is applied?
3. What is the optimal outcome, or which allocation of emissions
minimize the abatement costs? Please calculate the total abatement...

Assume you have three firms with different marginal abatement
cost functions as follows: MAC1 =2q1
MAC2 =q2 MAC3 = 12q3
It has been determined that the total amount of pollution should
be reduced by 35 units.
(a) Find the cost-effective allocation of pollution abatement
for each firm.

Two polluting firms emit 200 tons of SO2 each, with
Marginal Abatement Costs given by MAC1= 2X1 and MAC2= 3X2,
respectively. Xi represents the level of abatement for each firm i,
in tons.
The government wants to reduce total SO2 emissions by
30% and decides to impose a uniform cap on emissions, with each
firm receiving 140 allowances for free (firms don’t pay for
allowance).
a) In a first moment assume polluters are not allowed to
trade, so each firm...

Two polluting firms can control emissions of a pollutant by
incurring the following marginal abatement costs: MAC1 = $300?1,
and MAC2 = $100?2 where ?1, and ?2 are the amount of emissions
abated (i.e., pollution controlled) by firm 1 and firm 2
respectively. Assume that with no abatement of emissions at all,
firm 1 would release 15 units of pollution and firm 2 would release
10 units, for a total of 25 units. Assume the target level of
abatement is...

Consider two polluting firms. The marginal cost of abatement
for firm 1 is MC1 =
e1 + 300, and the marginal cost of
abatement for firm 2 is MC2 =
3e2, where e1 and
e2 are the tons of pollution abatement by firms 1
and 2, respectively. Baseline pollution levels are
bl1 = 2000 and
bl2 = 2000.
Suppose the government sets a pollution reduction goal of 1600
total units of abatement.
Write down two equations that ensure that the...

1. Consider the problem of two polluting sources in the region,
each of which generated 10 units of pollution for a total of 20
units released into the environment. The government determined that
emissions must be reduced by 12 units across the region to achieve
the ”socially desirable level of pollu- tion”. Each firm faces
different abatement cost conditions modelled as follows: for
Polluter 1, marginal abatement cost is MAC1 = 26- 2.6E1. For
Polluter 2, marginal abatement cost is...

A policy has been implemented to control pollution from two
firms. The marginal cost of abatement for firm 1 is $5/ton at its
choice of emissions. The marginal cost of abatement for firm 2 is
$3/ton at its choice of emissions.
What is true about this policy?
This policy is optimal
This policy is inefficient because both firms should increase
their abatement
The policy is inefficient because firm 1 should increase its
abatement and firm 2 should decrease its abatement...

Two polluting firms emit 200 tons of SO2 each, with
Marginal Abatement Costs given by MAC1= 2X1
and MAC2= 3X2, respectively. Xi
represents the level of abatement for each firm i, in
tons. The government wants to reduce total SO2 emissions
by 30% and decides to impose a uniform cap on emissions, with each
firm receiving 140 allowances for free (firms don’t pay for
allowance).
What is the market price of SO2 abatement?
How many permits are traded between firms,...

Two firms can control emissions at the following marginal
abatement costs. ?? 1= 200?1 and ??.2 = 100?1, where q1 and q2 are,
respectively the amount of emissions abated for firm 1 and firm 2.
Assume that with no control at all each firm would be abating 20
units of emissions or a total of 40 units for both firms. a)
Calculate the marginal cost for abating 20 units of emissions for
each firm. b) Calculate the cost-effective allocation of...

Assume there are two polluting firms in two different cities. In
the business-as-usual outcome, Firm #1 would emit 20 units of
pollution (e1=20) and Firm #2 would emit 20 units of
pollution (e2=20).
Additionally, assume the marginal abatement costs for Firm #1
and Firm #2 are given below: MAC1 (x1) =
0.5x1 & MAC2
(x2) = 2x2
This pollutant is known to cause adverse health effects when in
high concentrations. Since the firms are in different cities,
assume the marginal social benefit...

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