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them. Question 1 again, Consider a competitive market for electricity production in which some firms are polluters. Firm A (coal burning): C(XA)= x] and the environmental cost to society is E(XA)= 30 (XA). Firm B (wind power): C X B =i 20 XB and the environmental cost to society is E (XB) =0. i) Assume the market operates without any recognition of environmental costs. Find the supply function of each price-taking firm. Assume the market demand for the commodity is given by XP=_ 10000 P ii) (.Find the competitive market equilibrium price and quantity using the firm supply functions in i) and the market demand above. iii) sack) How much do each of the firms supply? iv) Suppose a planner uses the representative consumer's utility function, to find the socially optimal allocation of resources to the two firms. Choose (XA, XB, y) to solve max U (x , y)=(10000 ) In (x )+ y Subject to X=XA+XB, XA20AXB 20 and CXA+C XB +E XA)+ y=50,000 What will be the aggregate production level, and how much will each firm supply