I need help on 8 and 10. The questions are connected so I decided to upload everything

QueSLUIT I pullit A farm and wastewater treatment plant each pollute 5,000 lbs of nitrogen (N) into the Wabash River each year, generating total N emissions of 10,000 lbs. The Indiana Department of Environmental Management (IDEM) becomes worried about low water quality and human health effects that arise from the water contamination. The agency decides to limit N runoff to 8,000 lbs per year. The marginal cost of abating pollution is MAC ad = (2/3) ac for the farm and MACwlaw) = 2aw for the wastewater treatment plant, where a; i = F, W is the level of abatement. What condition must hold at the cost-effective equilibrium? Marginal abatement costs must be equal across all polluters. Each polluter must abate the same amount of pollution. Abatement is always costly, so neither polluter should abate any pollution. Total abatement costs must be equal across all polluters. Question 2 0/5 points IDEM initially proposes an emissions standard to achieve the required abatement. For fairness, IDEM makes each source abate 1,000 lbs of N. True or false: this uniform standard is cost-effective. (Be sure to choose the answer that correctly explains the reasoning behind this.) True. Cost-effective standards equate abatement across sources. False. Marginal costs are different between polluters, so having them both abate the same amount cannot be cost-effective. False. The marginal costs for the farm is much smaller than the marginal costs for the wastewater treatment plant, and so the farm should abate all 8,000 lbs. True. Neither source has any incentive to abate otherwise, so IDEM has to keep things fair to get the polluters to comply. Question 3 14.9985 / 15 points The cost-effective standard is for the farm to abate 1500 lbs of N and for the wastewater treatment plant to abate - 500 lbs of N. The marginal cost for both sources is $ 1000 Question 4 5/5 points Next, someone in IDEM suggests a pollution tax. The cost-effective tax is $ 1000 - /Ib N. Question 5 0/5 points A final IDEM employee suggests a marketable permit system. Specifically, the farm and wastewater treatment plant will each be allocated permits, where each permit represents one pound of N. How many total permits must be issued to achieve cost-effective abatement? 8,000 2,000 4.000 10,000 Question 6 5/5 points The market-clearing permit price is $ 1000/permit. Question 7 5/5 points Next, consider just the farmer's problem. Suppose the regulator sets a tax of $1,000/lb on his emissions of N. Assume this tax is perfectly enforced. The farmer will abate - 1500 lbs N under this tax. Question 8 0/5 points Assume now that enforcement is not perfect. If the farmer cheats on his taxes, he will only get caught 40% of the time. The farmer's abatement will be - 3750 lbs N under imperfect enforcement Question 9 5/5 points The regulator must choose a tax of 2500 to induce the farmer to abate at the cost-effective level, given that he is only caught cheating 40% of the time. Question 10 0/5 points The gains to the farmer from reducing his abatement under imperfect enforcement are $630,000. (You can confirm this on your own.) Suppose that instead of charging the higher tax that you found previously, the regulator leaves the tax at $1,000 but charges the farmer a penalty of $630,000 if they are caught cheating. True or false: this penalty will induce cost-effective abatement by the farmer. (Choose the answer with the most accurate explanation.) False. The expected gain from cheating are positive, so we would expect the farmer to cheat. True. The expected gain from cheating are negative, so we would expect the farmer to comply with the tax. True. The penalty is the same as what the farmer earns if he is not caught, so there is no incentive to cheat