Question

There are two factories in a small town. Both of them emit carbon dioxide into the...

There are two factories in a small town. Both of them emit carbon dioxide into the air. Factory 1 currently emits 120 tons per month, whereas factory 2 currently emits 160 tons per month. The technology of each factory is different, so their costs of reducing emissions are different as well. The tables below show the costs of reducing emissions in increments of 20 tons per month for each factory:

Factory 1
Total cost of reducing emissions by 20 tons/month $50
Total cost of reducing emissions by 40 tons/month $150
Total cost of reducing emissions by 60 tons/month $270
Total cost of reducing emissions by 80 tons/month $410
Total cost of reducing emissions by 100 tons/month $570
Factory 2
Total cost of reducing emissions by 20 tons/month $20
Total cost of reducing emissions by 40 tons/month $60
Total cost of reducing emissions by 60 tons/month $110
Total cost of reducing emissions by 80 tons/month $200
Total cost of reducing emissions by 100 tons/month $300



The existing technology does not allow for reductions in emissions beyond 100 tons/month. That is, the most each factory could reduce its emissions by is 100 tons/month.

Suppose the government in this town would like to cut monthly emissions to half of the current level. To do that, the government has decided to impose a tax for every 20 tons of pollution per month emitted by a factory. To achieve its desired goal (but not exceed the goal), the tax would have to be set between $______ and $______ for every 20 tons/month. (The first number should be the lower end of the tax, and the second number should be the higher end of the tax.)

Homework Answers

Answer #1

Here,

Factory 1 emissions per month = 120 tons

Factory 2 emissions per month = 160 tons

Total Emissions = 280 tons

Emission that government wants to reduce is 50%

So emission level Government is looking for = 50% of 280 = 140 tons

Now ,

Tons reduced per month Factory 1 Cost Marginal Cost factory 1 Factory 2 Cost Marginal Cost factory 1
20 tons 50 50 20 20
40 tons 150 100 60 40
60 tons 270 120 110 50
80 tons 410 140 200 90
100 tons 570 160 300 100

So,

IF the tax is $100 than 140 tons can be saved wit factory 1 saving 40 tons and factory 2 saving entire 100 tons

Now if the tax is increased till it reaches $120 there wont be incremental savings byong 120n factory 1 will save another 20 tons

So Range $100-$120 fr every 20 tons

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The town of Pollutionville has two smelting factories, Factory A and B. Each factory produces air...
The town of Pollutionville has two smelting factories, Factory A and B. Each factory produces air pollution. Factory A’s marginal abatement costs are given by MACA=20-0.5eA. Factory B’s marginal abatement costs are given by MACB=40-eB. The Pollutionville City Council wants to introduce a constant per unit emissions tax that will reduce total emissions from the two factories by 18.75% cost-effectively. The total tax receipts the Council would collect from such a tax would be $ _______________.
Please answer E only . Below are the marginal abatement costs from two different sources. They...
Please answer E only . Below are the marginal abatement costs from two different sources. They currently emit 100 tons each. A. What would the total abatement cost be for an equiporportional cutback to a total of 100 tons? B. Suppose we issue 10 transferable permits, each entitles the firm to 10 tons of emissions. They are distributed equally to both sources. What are the final emissions each of the two sources?             C. What are the total abatement costs...
Two plants are emitting a uniformly mixed pollutant called gunk into the beautiful sky over Tourist-Town....
Two plants are emitting a uniformly mixed pollutant called gunk into the beautiful sky over Tourist-Town. The local government sets the max allowed total emissions as 20kg of gunk per day. Plant C has marginal reduction costs of 20-XC and is currently polluting at a level of 20, while plant D has marginal reduction costs of 20-2XD and currently polluting at a level of 10. (XC and XD are the level of emissions at each plant) If the city government...
Cloud computing generates massive amount of carbon footprint from data centers used to achieve the cloud...
Cloud computing generates massive amount of carbon footprint from data centers used to achieve the cloud computing architecture. Suppose the state government now want to regulate carbon emission generated from cloud computing services, with the goal of reducing 40% of carbon emissions from the unregulated situation. There are two cloud computing companies operating in the state, Amacon Inc. and Goggle Inc., each emitting 1,000 tons of carbon per year into the atmosphere. Amacon can abate its emission with a marginal...
Two polluting firms emit 200 tons of SO2 each, with Marginal Abatement Costs given by MAC1=...
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...
Suppose that two firms emit a certain pollutant in Shreveport, Louisiana. The marginal cost (MC) of...
Suppose that two firms emit a certain pollutant in Shreveport, Louisiana. The marginal cost (MC) of reducing pollution for each firm is as follows: MC1= 3e1and MC2= 45e2, where e1and e2are the amounts (in tons) of emissions reduced by the first and second firms, respectively. Assume that in the absence of government intervention, Firm 1 generates 500 units of emissions and Firm 2 generates 500 units of emissions. Suppose Shreveport regulators decide to reduce total pollution by 400 units. If...
Suppose that two firms emit a certain pollutant in Shreveport, Louisiana. The marginal cost (MC) of...
Suppose that two firms emit a certain pollutant in Shreveport, Louisiana. The marginal cost (MC) of reducing pollution for each firm is as follows: MC1 = 3e1 and MC2 = 45e2, where e1 and e2 are the amounts (in tons) of emissions reduced by the first and second firms, respectively. Assume that in the absence of government intervention, Firm 1 generates 500 units of emissions and Firm 2 generates 500 units of emissions. Suppose Shreveport regulators decide to reduce total...
Efficiency through Emissions Taxes Consider two firms that emit a uniformly mixed air pollutant (e.g., carbon...
Efficiency through Emissions Taxes Consider two firms that emit a uniformly mixed air pollutant (e.g., carbon dioxide). The marginal abatement cost functions for Firm 1 and Firm 2 are (subscripts indicate firms): MAC1 =  100 - 2e1 MAC2 = 100 - 0.50e2 Aggregate emissions for the industry are denoted as E = e1 + e2. The marginal damage function is: MD = 0.40E [4] What is the efficient level of emissions for the two individual firms? e1* = e2* = [5]...
Two firms, Washburn (W) and Pillsbury (P), emit effluent into the Mississippi River as part of...
Two firms, Washburn (W) and Pillsbury (P), emit effluent into the Mississippi River as part of their flour-making operations. This effluent causes problems with the biochemical balance in the river and so the government wants to cut the amount of emissions by 10,000 gallons per day. W has an older factory and so has a higher cost of reducing its effluent emissions.The two total abatement cost functions (with abatement measured in thousands of gallons per day) are: TCw = 6...
Suppose there are only two sources of SO2 emissions in Ohio. Source 1 is a coal...
Suppose there are only two sources of SO2 emissions in Ohio. Source 1 is a coal fired power plant and Source 2 is an oil refinery. Marginal control costs for the two firms are given by MCC1=100*q1 and MCC2=300*q2, where q1 and q2 represent the tons of pollution that each respective firm controls. Each of these two sources both currently emits 20 tons of sulfur dioxide. Ohio's government decides that it wants to reduce SO2 pollution by 20 tons total....
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT