a. Why might the plants differ in their MACs? Which plant is the high cost abater? b.
Question:
a. Why might the plants differ in their MAC’s? Which plant is the high cost abater?
b. Suppose Alternative 1 is to apply equi-proportional reductions across the plants so that each plant would be assigned to emit 5 tons per week ( for a total 15 tons emitted). Calculate the TAC for alternative 1 . Show all work and explain your method.
c. Supposed Alternative 2 is to decrease emissions following the equimarginal principle .
i. State how you would apply the equimarginal principle here. What is the goal? What is the rule?
ii. Calculate the TAC for alternative 2. Show all work and explain your method.
d. Compare the TACs for the two alternatives. Which alternative should the firm choose to reduce emissions from 30 tons per week to 15 tons per week? Explain your reasoning.
Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba