Suppose the marginal damages function for a college (the pollutee) is: MD = 4E and the marginal abatement cost function for a nearby pesticide factory (the polluter) is:MAC = 200 - 4E where E is emissions in tonnes, and costs and damages are measured in dollars per tonne. Suppose also that the pesticide factory is liable for any damages it causes the college.

Using above information,for each of the below statements, select true if the statement is true and select false if the statement is false.

If E = 0, the pesticide factory's costs are equal to zero.

Answer 1

Choose...

True

False

If the level of emissions decreases from E = EMAXto the socially-efficient level of emissions, the costs to the college decrease by $3,750.

Answer 2

Choose...

True

False

EMAXis equal to 50 tonnes.

Answer 3

Choose...

True

False

At the socially-efficient level of emissions, emissions are equal to 50 tonnes.

Answer 4

Choose...

True

False

At the socially-efficient level of emissions, abatement is equal to 25 tonnes.

Answer 5

Choose...

True

False

If E = EMAX, the pesticide factory's costs are equal to zero.

Answer 6

Choose...

True

False

If the level of emissions decreases from E = EMAXto the socially-efficient level of emissions, the costs to the pesticide factory decrease by $2,500.

Answer 7

Choose...

True

False

If E = EMAX, the college's costs are zero.

Answer 8

Choose...

True

False

If the level of emissions decreases from E = EMAXto the socially-efficient level of emissions, total abatement costs increase by $5,000.

Answer 9

Choose...

True

False

If the level of emissions decreases from E = EMAXto the socially-efficient level of emissions, total damages decrease by $3,750.

Answer 10

Choose...

True

False