Suppose that the electric power industry is made up of two power plants. Each power plant has three smokestacks that emit sulfur dioxide. The accompanying table shows the emissions for the smokestacks at each plant. Suppose also that the EPA wants to decrease total sulfur dioxide emissions from the plants by 1,200 tons per day.

a. If the sulfur dioxide reduction occurs at the lowest possible cost, what is the total cost of reducing sulfur dioxide emissions by 1,200 tons per day?

b. If the EPA orders each plant to reduce the amount of emissions from each of their smokestacks by 200 tons per day, what is the total cost of reducing sulfur dioxide emissions by 1,200 tons per day?

c. If the EPA orders each plant to reduce their total pollution emissions by 600 tons per day but allows each plant to choose how to accomplish this reduction, what is the total cost of reducing sulfur dioxide emissions by 1,200 tons per day?

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Plant 1 Smokestack 1A Smokestack 1B Smokestack IC Emissions (tons per day) 400 400 400 Marginal Cost of Emission Reduction ($ per ton) $100 $200 $300