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.

Assume one firm operates three plants A, B and C. Each plant emits a particular residual into the environment, measured in tons per week. Assume the free-dumping level of emissions is 10 tons/weeks for each plant, so that a total of 30 tons is emitted each week. Suppose the firm wants to reduce total emissions by 50% to 15 tons emitted per week. Table 1 below shows the marginal abatement costs (MAC) for each of three plants related to the level of emissions. Table 1: Marginal Abatement Costs ($) by Level of Emissions for Three Plants Emissions (tons/wk) Marginal Abatement Costs ($/ton) Plant A Plant B Plant C 10 0 0 0 9 4 1 1 8 8 2 2 7 12 4 3 6 16 6 4 5 20 8 5 4 24 12 6 3 28 20 7 36 24 8 1 46 28 9 0 58 36 10 As the firm's economist, you are asked to evaluate the situation and two alternatives as described below. Baton and ? SAMe resp PLIKELY do