Suppose that there are two firms. Firm one has MAC₁=4000-200X₁ and Firm two has MAC₂=2000-100X₂.

a. Calculate the total abatement costs (for each firm and overall) if each firm is required, through a standard, to reduce their pollution to 8.5 units from their unregulated levels.

b. Suppose that the optimal level of pollution is 19 units. How should this be distributed between firms in order to achieve this target at least cost? Calculate the total abatement costs (for each firm and overall) from this distribution of pollution. Compare to your answer for (a).