1.17. An electricity producer has two power plants, each of which emits carbon dioxide (CO2), a greenhouse gas. Each plant is currently emitting 1 million metric tons of CO2 per year. However, new emissions rules restrict the firm’s emissions to 1 million metric tons of CO2 per year from both plants combined. The cost of operating a power plant goes up as it curtails its emissions.

The following table shows the cost of operating each plant for different emissions levels: