Consider two firms with the following marginal abatement cost (MAC) functions: MAC1 = 22-2E, MAC2 =...

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Consider two firms with the following marginal abatement cost (MAC) functions: MAC1 = 22-2E, MAC2 = 10- E2 %3D Moreover, assume that the marginal external damages (MED) from the aggregate emissions of both firms (EA = E1 + E2) is given by MED = 0.5EA- %3D %3D Suppose that the government institutes a cap and trade (i.e., tradable permits) policy in order to achieve the socially efficient level of aggregate emissions (EA*), meaning that the government sets the cap (or total amount of permits) equal to the socially efficient level of aggregate emissions EA*. If firm 2 is initially grandfathered 2 permits, then how many permits will it buy? Please round your final answer to two decimal places if necessary. Consider two firms with the following marginal abatement cost (MAC) functions: MAC1 = 22-2E, MAC2 = 10- E2 %3D Moreover, assume that the marginal external damages (MED) from the aggregate emissions of both firms (EA = E1 + E2) is given by MED = 0.5EA- %3D %3D Suppose that the government institutes a cap and trade (i.e., tradable permits) policy in order to achieve the socially efficient level of aggregate emissions (EA*), meaning that the government sets the cap (or total amount of permits) equal to the socially efficient level of aggregate emissions EA*. If firm 2 is initially grandfathered 2 permits, then how many permits will it buy? Please round your final answer to two decimal places if necessary.

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Given in th above question MAC I22E 3D MAL ... View the full answer