Question: Hello. I would like some help to solve this question please. I have shown my work for part b on the left side. I do

Hello. I would like some help to solve this question please. I have shown my work for part b on the left side. I do not know if it is.

Hello. I would like some help to solve this question please. I

2. (32 points) Suppose there are two factories. In the course of their operation, they burn fossil b) fuels releasing greenhouse gases into the atmosphere. The cost of abatement for these two MAC1=200-0.1E factories is described by MAC1 - 200 - 0.1E, and MAC2 - 200 - 0.4E2 respectively, where MAC2-200-0.4 Ei for i - 1, 2 is tonnes of CO2 emission per month. The damages caused in the atmosphere To find the Socially Efficient standard for each firm: can be described by MD - 0.12E. MAC1=MD 200-0.1E=0.12E (a) Derive the aggregate marginal abatement cost function and find the socially efficient level of E=909.09= Fi emissions. (8 points) MAC2=MD (b) Assume that the regulator sets individual emission standards to control pollution. Find the 200-0.4E=0.12E socially efficient standard for each firm and calculate the total compliance cost per firm. (12 E=384.62=Ei points) Total compliance cost for MAC1 (c) Assume that the regulator sets an emission tax to control pollution. Find the level of the TCC1=TAC1 TAC= 12(bh=>(1090.91*109.09)= $59503.69 emission tax that is consistent with the socially efficient equilibrium and calculate the total compliance cost per firm. (12 points) Total compliance cost for MAC2 TCC2=TAC2 TAC=1/2(b*h)=1/2(115.38*46.15)=$2662.39

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!