1. (70 points) The table below shows the discrete form marginal abatement costs of Sulphur Dioxide (SO2) for two firms (Khaadi and Nishat Linen). Each firm is currently emitting 10 tons of SO2: Emissions (Tons) 10 9 8 7 6 5 4 3 2 Marginal Abatement Costs (Rs/ton) Khaadi 0 2.000 4,000 6,000 8,000 10,000 12,000 14,000 18,000 28,000 48,000 Nishat 0 4,000 8,000 14,000 20,000 30,000 42,000 56,000 76,000 100,000 180,000 1 0 a. 6 points) Calculate each firm's total abatement cost for an equiproportionate 50 percent reduction in the current level of SO2 emissions. Suppose the regulatory authority creates permits such that each permit allows 1 ton of emissions. The regulator allows the firms to trade the permits with each other after. b. 6 points) For a 50 percent reduction in the current level of SO2 emissions, how many permits should the regulatory authority distribute? 1 Suppose the regulatory authority distributes the permits determined in part (b) equally to the two firms. c. 65 points) How much will each firm emit after trading? d. 6 points) What is each firm's total abatement cost after trading? c. (10 points) What are each firm's gains from trade? Assume all permits trade at the equilibrium price. Suppose the regulatory authority distributes all the permits determined in part (b) to Khaadi. f. 65 points) How much will each firm emit after trading? & 6 points) What is each firm's total abatement cost after trading? h. (10 points) What are each firm's gains from trade? Assume all permits trade at the equilibrium price. Suppose the regulatory authority distributes all the permits determined in part (b) to Nishat. i. (5 points) How much will each firm emit after trading? j. 65 points) What is each firm's total abatement cost after trading? k. (10 points) What are each firm's gains from trade? Assume all permits trade at the equilibrium price