2. W J Assume that you have two firms that face marginal abatement cost functions of MAC = 4.5A and MAC1 = 2.5A, where A is units of abatement undertaken by a firm. Both companies can sell up to two units of output and each unit of output generates one unit of pollution. The price for each unit of output is $12.00 that yields a revenue of $24 dollars per period. Each company is required to hold a permit for each unit of pollution generated. The government issues 2 permits and each company hold 1 permit. a. Using each marginal abatement cost functions, explain the strategy for Firm 1. Would they buy and additional permit or sell a permit when the price for permits is $3.00? Explain. b. Using each marginal abatement cost functions, explain the strategy for Firm 2. Would they buy and additional permit or sell a permit when the price for permits is $3.00? Explain. If the price for permits increases to $5.00, what is the strategy for Firm 1? Will there be a tradable permit market system if the price for permits is $5? c. 2. W J Assume that you have two firms that face marginal abatement cost functions of MAC = 4.5A and MAC1 = 2.5A, where A is units of abatement undertaken by a firm. Both companies can sell up to two units of output and each unit of output generates one unit of pollution. The price for each unit of output is $12.00 that yields a revenue of $24 dollars per period. Each company is required to hold a permit for each unit of pollution generated. The government issues 2 permits and each company hold 1 permit. a. Using each marginal abatement cost functions, explain the strategy for Firm 1. Would they buy and additional permit or sell a permit when the price for permits is $3.00? Explain. b. Using each marginal abatement cost functions, explain the strategy for Firm 2. Would they buy and additional permit or sell a permit when the price for permits is $3.00? Explain. If the price for permits increases to $5.00, what is the strategy for Firm 1? Will there be a tradable permit market system if the price for permits is $5? c