Two plants are emitting a uniformly mixed pollutant called gunk into the beautiful sky over Tourist-Town. The local government sets the max allowed total emissions as 20kg of gunk per day. Plant C has marginal reduction costs of 20-XC and is currently polluting at a level of 20, while plant D has marginal reduction costs of 20-2XD and currently polluting at a level of 10. (XC and XD are the level of emissions at each plant)

 

If the city government imposes a uniform, 10-kg-per-firm standard,

Q. What is the total costs from the standard?

Q. What is the cost-effective allocation of pollution across the two firms?