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a) b) c) d) There are two polluting firms with marginal abatement cost functions M4C) = 100 &1 and MAC?2 = 280 2e2, where e1
a) b) c) d) There are two polluting firms with marginal abatement cost functions M4C) = 100 &1 and MAC?2 = 280 2e2, where e1 and e2 represent the tonnes of pollution emissions per month from firms 1 and 2. Answer the following questions and use a carefully drawn graph to support your answers. What is the uncontrolled level of total emissions? (2) Suppose the environmental regulator has decided that total emissions must be reduced to a level of 120 tonnes per month. It adopts a policy of requiring each source to reduce its emissions to 60 tonnes per month. What is the total abatement cost incurred by the two firms combined? Show your work in a graph but also provide the numerical answer. (4) Suppose instead that the environmental regulator has decided to use an emissions tax to control emiszions to 120 tonnes per month. What is the total abatement cost in this case? Again, show your work in a graph and provide the numerical answer. (4) Is there a lower-cost way to control total emissions to 120 tonnes? Explain your answer. (2)
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