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There are two polluting firms, Firm A and Firm B. Firms can pollute or abate a total of 15 units each. Firm A's abatement costs
There are two polluting firms, Firm A and Firm B. Firms can pollute or abate a total of 15 units each. Firm A's abatement costs are given by the function: CA(sA)=(1/2)sA2 and Firm B's abatement costs are given by the function: CB(sB) =2sB2. The variable si represents the number of emissions abated by each firm. Emissions (x) hurt neighboring citizens according to the function: MD(x) = 7 (1/3)x. Our goal in this problem is to identify the efficient number of emissions abated and the emission fee necessary to reach this target. (New) Having found the inverse market supply function, now we need to find the market demand for abated emissions (aka the marginal willingness to pay for abated emissions). Transform the marginal damage function (which is a function of emissions) into a demand function for abated emissions. Hint: think about the relationship between total emissions and abated emissions in the market. Group of answer choices MWTP(s) = 15 - (1/2)s MWTP(s) = 25 - (1/3)s MWTP(s) = 17 - (1/3)s MWTP(s) = 20 - (1/2)s MWTP(s) = 27 - (1/5)s
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