Q# 1 Regulating lower SO₂ emissions: Acme and US Electric run coal-burning power plants.Each emits 40 tons of sulfur dioxide per month, total emissions = 80 tons/month.Goal:Reduce SO₂ emissions 25%, to 60 tons/month

Cost of reducing emissions: $100/ton for Acme, $200/ton for USE

Policy option 1:Regulation Every firm must cut its emissions 25% (10 tons).

Your task:

A)Compute the cost to each firm.

ANSWER:

B)Compute total cost of achieving goal with this policy

ANSWER:

Therefore,total cost of achieving goal =