Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Suppose that two firms, X and Y, face the following abatementcosts: MAC X =1.2 A X ,MAC Y = 0.3 A Y TAC X =
Suppose that two firms, X and Y, face the following abatementcosts:
MACX =1.2AX, MACY
= 0.3AY
TACX = 0.6AX2
TACY
= 0.15AY2
Further assume that the combined abatement standard is 40 units forboth firms.
Based on the model given, the cost-effective solution would ariseif
each firm abates 20 units of pollution | ||
firm X abates 8 units, and firm Y abates 32 units | ||
firm Y does all the abating because its MAC islower | ||
firm X abates 24 units, and firm Y abates 16 units |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started