J K L M N N o B D E F G H 1 1 Problem question #7 (17 marks) 2. 3 Following are the marginal abatement costs (MAC) of three firms, as they relate to the quantity of emissions. 4. Each firm is now emitting 10 tonnes/week, so total emissions equal 30 tonnes/week. 5 Suppose we wish to reduce total emissions by 50%, down to 15 tonnes/week. 6 7 A. What does economic theory call the emissions of 10/week per firm in this problem? 8 9 B. Calculate the total costs of reducing emissions down to 15 tonnes/week with an 10 equiproportionate reduction in emissions. 11 12 C. Calculate the total costs of reducing emissions down to 15 tonnes/week following the 13 equipmarginal principle. 14 15 D. How do total costs compare? Which option is most efficient? Why? 16 17 Show all your calculations in each of parts A, B, C. 18 ZU 21 Emissions 22 (tonnes/wk) 2 10 9 8 7 6 5 4 3 2 1 o 24 25 MACs ($/tonne) 20 0 4 8 12 16 20 24 28 36 46 28 58 36 0 1 2 4 6 8 12 20 24 0 1 2 3 4 5 6 7 8 9 10 27 Firm 1 28 Firm 2 29 Firm 3 JU 32 33 Answers below: 34 2 J K L M N N o B D E F G H 1 1 Problem question #7 (17 marks) 2. 3 Following are the marginal abatement costs (MAC) of three firms, as they relate to the quantity of emissions. 4. Each firm is now emitting 10 tonnes/week, so total emissions equal 30 tonnes/week. 5 Suppose we wish to reduce total emissions by 50%, down to 15 tonnes/week. 6 7 A. What does economic theory call the emissions of 10/week per firm in this problem? 8 9 B. Calculate the total costs of reducing emissions down to 15 tonnes/week with an 10 equiproportionate reduction in emissions. 11 12 C. Calculate the total costs of reducing emissions down to 15 tonnes/week following the 13 equipmarginal principle. 14 15 D. How do total costs compare? Which option is most efficient? Why? 16 17 Show all your calculations in each of parts A, B, C. 18 ZU 21 Emissions 22 (tonnes/wk) 2 10 9 8 7 6 5 4 3 2 1 o 24 25 MACs ($/tonne) 20 0 4 8 12 16 20 24 28 36 46 28 58 36 0 1 2 4 6 8 12 20 24 0 1 2 3 4 5 6 7 8 9 10 27 Firm 1 28 Firm 2 29 Firm 3 JU 32 33 Answers below: 34 2