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Four firms each currently emit 6 tonnes per day of sulfur dioxide into the air, so total emissions are 24 tonnes per day. Each firm

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Four firms each currently emit 6 tonnes per day of sulfur dioxide into the air, so total emissions are 24 tonnes per day. Each firm can take costly actions to reduce (i.e., abate) its emissions. The marginal abatement costs for each firm are given in the table below, with the marginal cost of abating increasing as emissions fall. Emissions Marginal Abatement Costs ($) (tonnes) Firm 1 Firm 2 Firm 3 Firm 4 $6 $12 $10 $8 $5 $11 $9 $7 $4 $10 $8 $6 $3 $9 $7 $5 $2 $8 $6 $4 $1 $7 $5 $3 If the government were to introduce an emissions tax of $5.50 per tonne on emissions of sulphur dioxide, total emissions of sulphur dioxide would be 12 tonnes per day 21 tonnes per day 9 tonnes per day 15 tonnes per day 24 tonnes per day 6 tonnes per day

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