1. Suppose that marginal damages suffered by two individuals are given by M D1(e) 2 10(61 + 62) and M D2(e) 2 5(61 + 62). Assume there are two rms that are creating emissions. Firm 1 has Marginal abatement costs of M 2401091) = 600 1561 and Firm 2 has Marginal abatement costs of M 1402022) 2 600 7.561. (a) (5 points) What is the equation for the aggregate marginal abatement cost? Solution: MAC(e) = 600 5e (b) (5 points) What is the equation for the aggregate marginal damages? Solution: MD(e) = 156