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Question 2: Suppose there are two polluters in the same region. Each generates 50 units of pollution per year so that there are 100 units
Question 2: Suppose there are two polluters in the same region. Each generates 50 units of pollution per year so that there are 100 units per year in total. The government decides that total pollution from these polluters should not exceed 4|] units per year. In addition, they decide to subsidize the abatement of emissions to achieve this goal. Each polluter's marginal abatement costs (MAC) and total abatement costs (TAG) are given below. Using this information. answer the following questions. Polluter 1: MAC] 2 20/11 and TACl = ltfll}2 Polluter 2: MAC; = 5A; and TAG; = 2.5012): Part (a) Suppose that the government offers a subsidy of $200 for each unit of emissions abated by the polluters. How many units of pollution will Polluter 1 choose to abate? Honr many units of pollution will Polluter '2 choose to abate? Will the abatement goal of Alum- = 60 be reached? Part (1)) What emissions subsidy will induce an overall reduction of 60 units of pollution? Un- der this subsidy, how many units of pollution will Polluter 1 choose to abate? How many units of pollution will Polluter 2 choose to abate? Part (-3) What are total abatement costs for the market (TACMKT) under the subsidy you found above
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