Your student ID number: 30T TO ECON6003 2020-21 Problem Set Template p.3 Q1 (10 marks) Consider the following hypothetical situation. There are three major mining companies in Australia. Without any regulation, their business as usual") annual emissions levels are as follows: --Polluter 1 emits 8,000 units of carbon monoxide (CO), --Polluter 2 emits 5,000 units of CO, and --Polluter 3 emits 10,000 units of CO. The local government decides to implement a tradable permit programme to regulate CO emissions. The total supply of permits (a.k.a. allowances) is set at 15,000 units per year, and the initial distribution of permits was 5,000 units per polluter. The three polluters' marginal abatement cost (MAC) functions are shown below (A i denotes the abatement levels of polluter i): MAC 100 MAC2 80 A1 Az 0 0 8000 5000 MAC3 100 A3 10000 Your student ID number: ECON6003 2020-21 Problem Set Template p.4 Q1a. Mathematically derive the final (after-trade) abatement levels of the three polluters. Provide the process of derivation and the resulting answer, below