Bart and Homer each operate a factory that pollutes the river and and harms Lisa's fishery,...

 

Transcribed Image Text:

Bart and Homer each operate a factory that pollutes the river and and harms Lisa's fishery, Reducing their emissions is costly for both producers. Bart's marginal cost of abate- ment is MACB 500- 10eg. Homer's marginal abatement cost is MACH 1000-20e. The government has decided that harmful emissions into the river need to be reduced by 18 units. To achieve this goal, two proposals are under consideration. Under proposal 1, Bart and Homer share the required emission reductions equally. Proposal 2 calls for the imposition of an emissions fee of $120 per unit of pollutant. Evaluate the total abatement costs under each proposal. If the government's goal is efficiency, which proposal should it choose? Explain. Bart and Homer each operate a factory that pollutes the river and and harms Lisa's fishery, Reducing their emissions is costly for both producers. Bart's marginal cost of abate- ment is MACB 500- 10eg. Homer's marginal abatement cost is MACH 1000-20e. The government has decided that harmful emissions into the river need to be reduced by 18 units. To achieve this goal, two proposals are under consideration. Under proposal 1, Bart and Homer share the required emission reductions equally. Proposal 2 calls for the imposition of an emissions fee of $120 per unit of pollutant. Evaluate the total abatement costs under each proposal. If the government's goal is efficiency, which proposal should it choose? Explain.

Answer rating: 100% (QA)

Marginal cost is the change in total cost that arises due to producing more unit of a good Marginal ... View the full answer