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Optimal emissions Given: MAC T = 1,750-e t MD T = 0.75e T Find the efficient level of total emissions There are two firms with
Optimal emissions Given:
MACT = 1,750-et MDT = 0.75eT
Find the efficient level of total emissions
There are two firms with abatement cost functions:
MAC1=1500-e1
MAC2 = 2000-2e2
Find:
- Emissions per firm with no regulation
- MAC and TAC for each firm if the efficient level of emissions is divided in half
- If efficient emissions are divided in half, how much does each abate?
- The allocation of emissions that will minimize total abatement cost across firms
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- ANSWER:
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- Emissions per firm with no regulation (750, 1000)
- MAC and TAC for each firm if the efficient level of emissions is divided in half ($500 and $62,500 for firm l ) ($1,000 and $250,000 for firm 2)
- If efficient emissions are divided in half, how much does each abate? (250 and 500)
- The allocation of emissions that will minimize total abatement cost across firms (375 and 625 respectively)
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