How to minimize cost of a firm

Reference no: EM13176820

1) Under a strict command and control framework, suppose abatement standards are set equally across polluters. Assume the total abatement target is set at 30 units. Show the cost implications using three graphs, each of a different polluter with a unique MAC curve drawn to depict a "low cost abater," a "moderate cost abater," and a "high cost abater." On each graph, identify the abatement level corresponding to a uniform standards approach. and show the level of MAC at that point and the area corresponding to TAC.

2) It is well documented that carbon monoxide (CO) emissions from combustible engines increase in colder climates. This in turn implies that damages are expected to be less severe in summer months than in winter. Nonetheless, air quality control authorities use a standard for CO that is uniform throughout the year with no allowance for seasonal effects. Use this information and the following model to answer the questions below.

MSB of CO abatement in winter = 350 - 0.5A;

MSB of CO abatement in summer = 140- 0.2A;

MSC of CO abatement = 0.2A,

where A is the level of CO abatement

a. Graph the MSB and MSC functions on the same diagram.

b. Assume the government sets a uniform standard for winter and summer at A = 500. Support or refute this policy based on the criterion of allocative efficiency, using your model to explain your response.

c. If you were in charge of setting policy for CO emissions, what action would you recommend to assure an allocatively efficient outcome across the two seasons?

3) Assume that two power plants, Firm 1 and Firm 2 release sulfur dioxide (SO2) in a small urban community that exceeds the emissions standard.To meet the standard, 30 units of SO2 must be abated in total. The two firms face the following abatement costs:

MAC1=16+0.5 A1, MAC2=10+2.5 A2 where costs are measured in thousands of dollars.

a. Prove that a uniform standard will not meet the cost effectiveness criterion.
b. Determine how the abatement levels should be reallocated across the two firms to minimize costs.

Reference no: EM13176820

Questions Cloud

State predict the order of appearance of the precipitates : 0.1 M NaCl was slowly added would a precipitate(s) form? if more then one precipitate could form, predict the order of appearance of the precipitates.

Define aggregate production function : Assuming other things equal and capital and labor are fixed in quantity and using our aggregate production function and factor market diagrams, illustrate what happens to output, the real retal rate on capital, and the real wage of labor following..

State write the molecular and net ionic equation : write the molecular and net ionic equation for when AgNO3 and Na2CO3 are mixed. Then write the net ionic equation when each of the following stresses are applied to the same mixture.

State a compartment containing a copper electrode immersed : In a cell constructed between a compartment containing a zinc electrode immersed in a 0.1 M ZnSO4 (aq) solution and a compartment containing a copper electrode immersed in a 0.1 M CuSO4 (aq) solution,

How to minimize cost of a firm : Assume the government sets a uniform standard for winter and summer at A = 500. Support or refute this policy based on the criterion of allocative efficiency, using your model to explain your response.where A is the level of CO abatement

Why international trade economists find invalid the argument : For example, if the U.S. sold cars in Japan in addition to Japanese cars being imported into the U.S., that would be cross-hauling. Trade statistics show that many commodities are cross-hauled.

State which resonance structure is the major contributor : show the flow of electrons and predict which resonance structure is the major contributor

Explain complex assembly operation : In a complex assembly operation, it is found that the learning curve rate is 70%. The standard time of 3 minutes per assembly is reached after the 110th unit. Find i. The time required for the very first unit.

State the most probable distance of the innermost electrons : Its atomic number was believed to be 126. What is the most probable distance of the innermost electrons from the nucleus of an atom of this element?

User Account

All Pages