Question: Hello, I am having a hard time interpreting the chart amd using it to answer the questjons. Any help would be much appreciated. Cap and
Cap and trade practice problem Firm A and Firm B have the following marginal cleanup costs: Emission level (tons/month) Firm A Firm B 10 0 0 9 1 2 8 2 7 7 3 13 6 5 17 5 7 25 4 10 36 3 13 49 2 17 61 1 21 88 0 25 124 O Nm Suppose that the EPA implements a command-and-control type regulation and forces each firm to reduce emissions from 10 tons each to 5 tons each. a. What is the total cleanup cost to society of this regulation? b. Now suppose that an economist convinces the EPA to institute an efficient emissions tax. What level should the EPA set the tax at? c. What are the new total cleanup costs to society? d. What is the tax revenue? e. Suppose, instead of a tax, the government gave away 5 tradable permits to each firm. Which firm would sell permits and how many would they sell? Which firm would buy permits and how many would they buy? Cap and trade practice problem Firm A and Firm B have the following marginal cleanup costs: Emission level (tons/month) Firm A Firm B 10 0 0 9 1 2 8 2 7 7 3 13 6 5 17 5 7 25 4 10 36 3 13 49 2 17 61 1 21 88 0 25 124 O Nm Suppose that the EPA implements a command-and-control type regulation and forces each firm to reduce emissions from 10 tons each to 5 tons each. a. What is the total cleanup cost to society of this regulation? b. Now suppose that an economist convinces the EPA to institute an efficient emissions tax. What level should the EPA set the tax at? c. What are the new total cleanup costs to society? d. What is the tax revenue? e. Suppose, instead of a tax, the government gave away 5 tradable permits to each firm. Which firm would sell permits and how many would they sell? Which firm would buy permits and how many would they buy
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