4. There are two power generating firms A and B in a country "Elec-land". Carbon will be emitted in power generating process.

Current level of carbon emissions is 150 for A and 100 for B. Marginal cost of carbon emission reduction for two firms are as follows.

MCA = 3qA + 30

MCB =2qB + 20

where q is the amount carbon emission reduction.

Marginal benefit of emissions reduction is estimated to be

MB = 200- 2q

To reduce the carbon emission, a government is considering emission fee or cap-and-trade scheme.

(a) What is the socially optimal level of emissions reduction?

(b) If emissions fee is set at 120, what is the amount of emissions reduction?