Please explain how you get the equations for what determines the tax and amount of permits.

Suppose we have two main energy providers in Kalamazoo: Consumers Energy and Indiana Michigan Power. We now want to allow force cleanup of 2,120 tons of pollutants between the two firms. We also would like to do so in a cost-effective manner (4 pts) Assume the MAC for Consumers Energy is -4a Assume the MAC for Indiana Michigan Power is 2.7al. 01) Instead of the regulator instructing each firm on their abatement level, the regulator imposes a per unit pollution tax. What price must this tax be to achieve cost-effective abatement to 2.120 total tons of pollution? Explain why. (3 pts) a) Graph the MAC for each firm below, and demonstrate application of a cost effective tax (2 pts) Q2) The regulator realizes that most people hate the word tax. Instead, the regulator opts to introduce a permit based pollution control system. Historical pollution levels are 8,000 (4,000 tons per firm) tons. How many total permits will be issued by the Regulator to hit the cleanup goal? (1 pt) a) Suppose we evenly allocate the permits to both Consumers Energy and Indiana Michigan Power. Using the MAC for each firm and the total allocated quantity of permits, explain why there are gains from buying and selling permits. (3 pts) b) Based on your cost-effective abatement solutions, who buys permits (and how many) and who sells permits (and how many? Using this information, what is the market clearing permit price? (4 pts) Suppose we have two main energy providers in Kalamazoo: Consumers Energy and Indiana Michigan Power. We now want to allow force cleanup of 2,120 tons of pollutants between the two firms. We also would like to do so in a cost-effective manner (4 pts) Assume the MAC for Consumers Energy is -4a Assume the MAC for Indiana Michigan Power is 2.7al. 01) Instead of the regulator instructing each firm on their abatement level, the regulator imposes a per unit pollution tax. What price must this tax be to achieve cost-effective abatement to 2.120 total tons of pollution? Explain why. (3 pts) a) Graph the MAC for each firm below, and demonstrate application of a cost effective tax (2 pts) Q2) The regulator realizes that most people hate the word tax. Instead, the regulator opts to introduce a permit based pollution control system. Historical pollution levels are 8,000 (4,000 tons per firm) tons. How many total permits will be issued by the Regulator to hit the cleanup goal? (1 pt) a) Suppose we evenly allocate the permits to both Consumers Energy and Indiana Michigan Power. Using the MAC for each firm and the total allocated quantity of permits, explain why there are gains from buying and selling permits. (3 pts) b) Based on your cost-effective abatement solutions, who buys permits (and how many) and who sells permits (and how many? Using this information, what is the market clearing permit price? (4 pts)