Suppose there are two firms generating emissions: Firm 1 has marginal abatement cost function MAC1 = 500-5E Firm 2 has marginal abatement cost function MAC2 = 800-5E

A) Suppose that the regulator would not only sets a uniform standard of Es = 30, but also applies penalties to firms that emit above the standard. The marginal penalty curve is MPC = 350 + (E-Es) if E>Es and 0 otherwise. Where E is the emissions emitted by a firm and Es is the standard. Penalties are applied to each unit of emissions in excess of the standard at the rate PMC. How many units of emissions does each firm emit?

B) Suppose that the regulator would not only sets a uniform standard of Es = 30, but also applies penalties to firms that emit above the standard. The marginal penalty curve is MPC = 350 + (E-Es) if E>Es and 0 otherwise. Where E is the emissions emitted by a firm and Es is the standard. Penalties are applied to each unit of emissions in excess of the standard at the rate PMC. How many units of emissions does each firm abate?

C)

Suppose that the regulator would not only sets a uniform standard of Es = 30, but also applies penalties to firms that emit above the standard. The marginal penalty curve is MPC = 350 + (E-Es) if E>Es and 0 otherwise. Where E is the emissions emitted by a firm and Es is the standard. Penalties are applied to each unit of emissions in excess of the standard at the rate PMC. What is the marginal abatement cost for each firm and the marginal penalty cost for each firm? (MAC and PMC at the level of emissions that each firm emits)