5.Regulators are considering controlling the emissions from two local power plants. The marginal benefits (the demands for emissions) derived by these plants from being able to produce a given quantity of emissions are 360 3EA for the first plant and 360 6EB for the second plant.

(a) (5 points) Graph both of these marginal benefit curves, being careful to label your axes and intercepts. How much does each individual plant choose to emit in the absence of regulation?

(b) (5 points) Find the aggregate marginal benefit of emissions (MBE) function (hint: horizontally sum the individual plants' marginal benefits). Add this function to your graph.

(c) (5 points) Suppose the marginal damages from emissions are MCE = 10 + 3(EA + EB) = 10 + 3E. Add this function to your graph. What is the efficient level of emissions? You may round to the nearest whole number.

(d) (5 points) What is the efficient Pigouvian tax? You may round to the nearest whole number.

(e) (5 points) If faced with the tax identified in part (d), how much will each firm choose to emit? You may round to the nearest whole number (note these may not add up to E exactly due to rounding).