(20 pts) Two plants are emitting a uniformly mixed pollutant called gunk into the skyover Canton, NY. The city government decides that it can tolerate total emissions of no more than 100kg of gunk per day. Plant G has marginal abatement costs of MACG = 4AG and is currently polluting at a level of 25, while plant K has marginal abatement cost of MACK = AK and currently pollutes at a level of 150. AG and AK are levels of abatement at the two plants (in kg). The total costs of abatement at the two plants are: T ACG = 2A2G and T ACK = 0.5A2K. T

he equilibrium abatement is 60 kg for firm k and 15 kg for firm G 100 permits total

9. Suppose the marginal benefits of pollution reduction are constant and equal to: MSBA =64$/ton. Is the governments chosen 100 kg of pollution level socially efficient? If so, how do you know, and if not, should it allow more pollution or require more abatement for social efficiency? (2 pts)