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There are two coal-fired power plants (source A and source B) in Illinois that emit mercury pollution to the air. The Clean Air Act Regulates this pollution as a "Hazardous Air Pollutant" and Illinois must enforce new rules for the power plants in the state. The total mercury air emissions from both power plants (Source A and B) are limited to 500 tons per year. Source A is an old, established company with ancient equipment. Source B is a newer company with better machinery. Their MAC curves (as functions of their emission levels) are: MACB(EB) = 300 - 0.5EB MACA(EA) = 400 - 0.5 EA Illinois is considering two policy options to meet the restrictions for mercury emissions: A uniform emissions standard and an emissions tax. (a) If Illinois uses a uniform emissions standard to meet the requirements, how many tons of emissions will each power plant be permitted to emit? (b) Calculate the total cost to satisfy the limit on mercury emissions with the uniform standard. (c) If Illinois decides to use an emissions tax to achieve the goal, it must select the level of tax. Use a two-sided graph approach to diagram the tax needed to meet the emissions requirement (500 tons) at the minimum total cost. (d) Calculate the level of this tax and the total abatement cost to meet the emissions requirement with a tax policy.

There are two coal-fired power plants (source A and source B) in Illinois that emit mercury pollution to the air. The Clean Air Act Regulates this pollution as a "Hazardous Air Pollutant" and Illinois must enforce new rules for the power plants in the state. The total mercury air emissions from both power plants (Source A and B) are limited to 500 tons per year. Source A is an old, established company with ancient equipment. Source B is a newer company with better machinery. Their MAC curves (as functions of their emission levels) are: MACA(EA)=4000.5EA MACB(EB)=3000.5EB Illinois is considering two policy options to meet the restrictions for mercury emissions: A uniform emissions standard and an emissions tax. (a) If Illinois uses a uniform emissions standard to meet the requirements, how many tons of emissions will each power plant be permitted to emit? (b) Calculate the total cost to satisfy the limit on mercury emissions with the uniform standard. (c) If Illinois decides to use an emissions tax to achieve the goal, it must select the level of tax. Use a two-sided graph approach to diagram the tax needed to meet the emissions requirement ( 500 tons) at the minimum total cost. d) Calculate the level of this tax and the total abatement cost o meet the emissions requirement with a tax policy. (e) How much tax revenue would be collected? (f) What are some reasons why Illinois might choose to use an emissions standard instead of a tax