5. The Alberta government decided to reduce mercury emissions from coal-fired plants by up to 50%...

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5. The Alberta government decided to reduce mercury emissions from coal-fired plants by up to 50% within the Greater Edmonton region (GER). There are two options available for the government to choose from: setting either an emissions standard or an emissions fee. The Alberta government is unsure whether the marginal abatement costs will be low or high. Let's assign MC to high abatement cost and MC to low abatement cost. MC = 10E+ 480 MCH 10E-480 MB = 800-6E where E refers to units of mercury abated. According to the last study, the Alberta government estimated a 50% chance of each of the marginal abatement costs. a. Calculate the optimal level of emissions for each of the cost curves above. b. Write the expected marginal abatement cost (equation). c. Calculate the optimal emissions standard according to the expected abatement costs. d. Calculate the optimal abatement fee according to the expected abatement costs. e. Why is it socially efficient to set marginal benefits equal to marginal costs rather than abating until total benefits equal total costs? f. List and explain two methods to remedy an externality by a government. 5. The Alberta government decided to reduce mercury emissions from coal-fired plants by up to 50% within the Greater Edmonton region (GER). There are two options available for the government to choose from: setting either an emissions standard or an emissions fee. The Alberta government is unsure whether the marginal abatement costs will be low or high. Let's assign MC to high abatement cost and MC to low abatement cost. MC = 10E+ 480 MCH 10E-480 MB = 800-6E where E refers to units of mercury abated. According to the last study, the Alberta government estimated a 50% chance of each of the marginal abatement costs. a. Calculate the optimal level of emissions for each of the cost curves above. b. Write the expected marginal abatement cost (equation). c. Calculate the optimal emissions standard according to the expected abatement costs. d. Calculate the optimal abatement fee according to the expected abatement costs. e. Why is it socially efficient to set marginal benefits equal to marginal costs rather than abating until total benefits equal total costs? f. List and explain two methods to remedy an externality by a government.

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a Optimal Level of Emissions For low abatement cost MCL 10E 480 Set MB MCL 800 6E 10E 480 Solve for ... View the full answer