Pollution Abatement (25 points). Suppose that there are three coal-fired power plants with the following marginal abatement cost curves for reducing sulfur dioxide pollution, where A is tons of sulfur dioxide abatement: MAC1 = 3A1 MAC2 = 6A2 MAC3 = 9A3 a. If the EPA sets a pollution tax of $99 per ton of sulfur dioxide emissions, how many tons would each firm abate? b. Suppose the baseline (business as usual) emissions level for each firm is 75 tons. How many tons of sulfur dioxide will the three firms produce with the pollution tax of $198 per ton? c. Suppose instead of a pollution tax, the government sets up a cap and trade program such that the total emissions allowed across the three firms is 100 tons. Assuming the market for permits is perfectly competitive, how many permits will each firm hold in equilibrium and what will be the equilibrium permit price? (Hint: a total of 125 tons has to be abated). d. If the firms were allocated an equal number of permits initially, which firm would sell permits?