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There are two firms in the economy. Firms is Producing steel and its cost function is : CS (s, x ) = S2 X Where

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There are two firms in the economy. Firms is Producing steel and its cost function is : CS (s, x ) = S2 X Where s is the amount of steel produced and X is the amount of Pollution Produced by Firms. The maximum Possible amount of pollution is x =2 and the minimal possible amount of pollution is x = 0.1 Firm F is Producing Fish and its cost function is: Cf ( f , x ) = f 2 x Where f is the amount of fish caught. Suppose that initially Firm F [Instead of FirmsT has the control of Pollution. The output prices are Ps =ff = 1 state the profit-maximization problems of the firms and Firm F 2.) Find the optimum Choices by t, s, X by firm I and firm s 3. Solve for the social optimum f, s, x

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