In accordance with the dual-control approach, suppose New Mexico's NOX abatement standard for

existing sources is 5 units (A_E) and the EPA's standard for new sources is 12 units (A_N). The two types of

sources face the following MAC functions, where each MAC is in thousands of dollars.

Existing: MAC_E = 1.8A_E New: MAC_N = 1.2A_N

(a) What economic criterion is violated because of the current standard? Explain your reasoning.

(b) Find the standard that will make abatement cost-effective assuming that the combined abatement required

of the two polluters is 17 units.