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IPart l: Pollution Policies Next to a forested area, there are 3 forest product Marginal Abatement Costs companies. Each rm is currently emitting 5 units Toilet Cardboa rd Maple of air pollution and could conceivably clean up Units of paper box syrup those 5 units bl\" in doing 50: they \"Wild incur abatement company company com pany' costs according to the schedule provided. Use this 1 5 2 3 information to determine how different policies 2 6 4 5 would impact these lms and society in the 3 7 6 9 following questions. 4 7 8 12 ' 5 9 10 15 1) 2) El (5 points] Suppose that the government has determined that, given the forest close by, the locality can take on 6 units of pollution with low risk to society, aer which the risk rises exponentially. If they put a standard in place, requiring each firm to clean up 3 units of pollution, what would be the costs of this policy? Ifthe damage for the next unit of pollution above this stande were $10, would this be an efcient policy? Graphically illustrate and explain in words why or why not. a. The cost would be 22 in total when adding together 7 from toilet paper, 6 from cardboard, and 9 from maple syrup. 3-7+22=18 would be the cost for the toilet paper company. b. The current cost of the next unit of pollution would be $24 which would be lower than if the three companies had to pay $10 each costing them $30 in total. This is to say that this deal would be bad since the companies would have to pay more with this deal than without. 3-?+24=21 c. (5 points} The government has heard the market-based instruments are preferable as they achieve pollution control at the least cost to society. Two such policies discussed in class were a tax and a cap and trade policy. Explain how these two could be applied in this scenario. What would be the optimal taxfpermit price? What is the cost of these policies to lms? Would society he better or worse 011' under these market-based policies relative to the standard? Why or why not? What are the trade-offs associated with each policy from the perspective of the firm and society