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Lecture 15: Cost Effectiveness Rule Problem Instructions: Fill out the chart and answer the questions. Explain and calculate the cost effectiveness rule: There are

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Lecture 15: Cost Effectiveness Rule Problem Instructions: Fill out the chart and answer the questions. Explain and calculate the cost effectiveness rule: There are two firms both releasing CO into the atmosphere and the two firms face differing costs of clean up. Firm A has a marginal cost of cleanup being MCA = 30-A and firm B has a marginal cost of cleanup being MCB = 30-3B. Please calculate the costs of cleaning up each additional unit of CO2 for each firm. (If the cost is negative put in 0 for the cost of cleaning up that unit) (5 points) Quantity MC to Firm A MC to Firm B 30 29 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0

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