Suppose a tax on firm emissions is imposed and that the tax, t, is equal to...

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Suppose a tax on firm emissions is imposed and that the tax, t, is equal to $350/ton. Using a graph, show the cost minimizing level of emissions for a typical firm and label this level e*. Also argue why e* is the cost minimizing level compared to any other emissions level e. (5 points) (5.a) Also on your graph above, show the areas related to the total abatement costs incurred (label as area a) and the total tax payments made by the firm (label as area b). (4 points) (5.b) Using the same graph above, your answers, and the space below, argue why firms might prefer an emissions standard to an emissions tax. To make your argument, assume that the standard to be imposed is such that it is chosen to be comparable to the optimal level emissions that would result from use of the tax, i.e. the emissions standard to be imposed will be such that es e*. (5 points) Suppose a tax on firm emissions is imposed and that the tax, t, is equal to $350/ton. Using a graph, show the cost minimizing level of emissions for a typical firm and label this level e*. Also argue why e* is the cost minimizing level compared to any other emissions level e. (5 points) (5.a) Also on your graph above, show the areas related to the total abatement costs incurred (label as area a) and the total tax payments made by the firm (label as area b). (4 points) (5.b) Using the same graph above, your answers, and the space below, argue why firms might prefer an emissions standard to an emissions tax. To make your argument, assume that the standard to be imposed is such that it is chosen to be comparable to the optimal level emissions that would result from use of the tax, i.e. the emissions standard to be imposed will be such that es e*. (5 points)