tonnes per year. a. If the government knew the cost of reduction for each firm, what reductions

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tonnes per year.

a. If the government knew the cost of reduction for each firm, what reductions would it impose to reach its overall goal? What would be the cost to each firm and the total cost to the firms together?

b. In a more typical situation, the government would not know the cost of pollution reduction at each firm. If the government decided to reach its overall goal by imposing uniform reductions on the firms, calculate the reduction made by each firm, the cost to each firm and the total cost to the firms together.

c. Compare the total cost of pollution reduction in parts

(a) and (b). If the government does not know the cost of reduction for each firm, is there still some way for it to reduce pollution to

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Economics

ISBN: 9781408093795

3rd Edition

Authors: Mark P. Taylor, N. Gregory Mankiw

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