Two firms produce a pollutant called Q. The total costs of reducing emissions of Q are as follows for Firm 1 and Firm 2, respectively:
TC1=10+100Q12
TC2=20 + 50Q22.
This means that the marginal costs of reducing emissions of Q are as follows for Firm1 and Firm2, respectively:
MC1=200Q1
MC2=100Q2.
1. Suppose that a regulator has determined that total emissions of Q must be reduced by 20 units. Determine the cost efficient levels of emissions reduction that should be undertaken by Firm1 and Firm2. Remember that the equimarginal principle requires that marginal costs be equated across the two polluters for emissions reduction costs to be minimized. (10).

2.Suppose that, instead of the cost efficient levels of emissions reduction, the regulator orders that emissions be reduced by 10 units for each firm (20 units total). How much more will this allocation of emissions reductions cost, compared to the cost efficient levels? (5).

3.Your correct answer in A is the cost efficient allocation of emissions reduction. What else would you have to know in order to determine whether this is an efficient level of emissions reduction? In answering this question, recall the difference between cost efficiency and maximizing net benefits. (5).

Posted Date: 11/2/2014 3:13:40 PM | Location :

Ask an Expert

Related Discussions:- Need Econ Help, Assignment Help, Ask Question on Need Econ Help, Get Answer, Expert's Help, Need Econ Help Discussions

Write discussion on Need Econ Help
Your posts are moderated

Write your message here..

Related Questions

Revenue, draw the supernormal curve draw the supernormal curve

Cyclical fluctuations, Cyclical Fluctuations: Consider a situation whe... Cyclical Fluctuations: Consider a situation where the value of money above trend indicates an unexpectedly high level of money in the recent past. The model predicts that this

Credit squeeze, Credit Squeeze:At times private banks become reluctant to i... Credit Squeeze:At times private banks become reluctant to issue new credit andloans, frequently because they are worried about risk of default by borrowers. This is common at the t

Marginal product theory, Marginal Product Theory a.    What is the MC ... Marginal Product Theory a.    What is the MC of output in the short-run? b.    What is the MC of labor (employed)? c.    What is the short-run profit-maximizing decision

Ccc, #question.ccccc #question.ccccc

Law of cardinal utility approach, ??????? ??? ???? ??? # 100 ?????? #Minimu... ??????? ??? ???? ??? # 100 ?????? #Minimum ?????? ?????

Opportunity cost, there are 1 million hours of labor available for making c... there are 1 million hours of labor available for making cars in the north, and another 1 million hours of labor available for making cars in the south. in a no-trade world, let''s

Income elasticity, With the recession, average incomes have fallen from $44... With the recession, average incomes have fallen from $44,375 to $41,720.  Before the recession Groucho's Gizmos sold 600 gizmos a month. As an economics, predict the number of gizm

#title.elasticity of demand., different btn elesticity of demand and inelas... different btn elesticity of demand and inelasticity of demand

Business card etiquette, "In U.S., there is a culture of greeting people of... "In U.S., there is a culture of greeting people of the same sex. It's not common that people give attention to the people of the opposite sex. However, in the middle class, it's a