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emissions taxes vs. technology standards Steel producers can choose among the following five production techniques. Suppose that the market price (and social cost) of ordinary

emissions taxes vs. technology standards

Steel producers can choose among the following five production techniques. Suppose that the market price (and social cost) of ordinary inputs is 1 and that the social cost of each unit of SO2 emitted is 10.

Technique Per-unit input requirements

ordinary inputs (K) 28 emissions (SO2) 4 A
B 31 3
C 37 2
D 46 1
E 58 0

a. [3] Calculate the social cost of each technique. [Hint: social cost should reflect the cost of emissions as well as the production costs.] What production technique minimizes the social cost per unit of steel production? What is the amount of this social cost?

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