Suppose a chemical factory discharges waste products into a river resulting in significant damages to a local fishery. The marginal damage to the fishery is represented by the equation:

MDC = 0.5E

The chemical factory can reduce its effluent flows by treating its waste products. Its marginal abatement cost (MAC) function is given by the equation:

MAC = 4,000 - 0.5E.

(a) Explain and calculate the level of emissions that will occur if the chemical factory is not regulated. [2 marks]

(b) What would the total abatement costs for the chemical factory be if all emissions are controlled and required to be reduced to zero? [2 marks]