1. Abatement Cost and Damages, and Emission Taxes: Consider the simple model of abatement costs and damages we discussed in class. (a) How should the regulator set a tax rate to achieve the socially efficient emissions level? Use a picture to illustrate your answer. (b) What will happen to the socially efficient emissions level if there is both (i) a decrease in marginal abatement costs (ii) an increase in marginal damages? Explain briefly and use a picture to illustrate your answer. (c) When there is both (i) a decrease in marginal abatement costs (ii) an increase in marginal damages, what will happen to the optimal emissions tax rate that the regulator sets to achieve the socially efficient emissions level? Will the tax rate increase or decrease for sure, or does the answer depend on how much marginal abatement costs decrease by and how much marginal damages increase by? Explain carefully and use pictures to illustrate your