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Suppose a polluting firm in a competitive industry has MAC = 360 - 3E. Using a subsidy program, if the government wants to reduce emissions

Suppose a polluting firm in a competitive industry has MAC = 360 - 3E. Using a subsidy program, if the government wants to reduce emissions from this firm to 80 units,

(a) what subsidy rate should be applied ?

(b) what is the amount of social costs of reducing emissions to 80 units?

[ Show some work to justify your answer.]

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