Determining the marginal costs of emission control

Assignment Help Macroeconomics

Reference no: EM133202663

Assignment:

Consider two power plants, A and B, with the marginal costs of emission control (i.e. emission reduction) as shown in the following picture.

2307_Marginal control cost of plant.jpg

In the picture, Plant A's emission controlled (i.e. emission reduced) is measured from the left-hand side and plant B's emission controlled is measured from the right-hand side. Suppose plant A generates 20 units and plant B generates 12 units of emission in the absence of regulation.

A) Suppose a regulation sets the total emission cap of 14 units and establishes the emissions standards of 11 units for plant A and 3 units for plant B. What are the marginal emission control costs of the two power plants?

B) Suppose the regulator allows trading of emission permits between the two plants. Assume that both power plants are price takers. What will be the equilibrium market price of permits? How many permits will be traded between the two plants?

C) Graphically identify the cost saving (the sum for the two power plants) under permit trading relative to the case of emission standards. Compute the amount of cost saving.

Reference no: EM133202663

Questions Cloud

The smart city os consultancy report : Project Management Essentials - THE SMART CITY OS CONSULTANCY REPORT - build a Project Management Consultancy Report based on the Smart City OS case study

Explain the use of renewable energy : 1. Choose the best answer. Increased use of renewable energy can be encouraged by

How does the earth end : We've watched a few videos regarding the end of the Earth. A long time from now hopefully.

What tools can person use to get prepared for sales meeting : Why is presentation pre-planning important? What tools can a person use to get prepared for a Sales meeting?

Determining the marginal costs of emission control : Suppose a regulation sets the total emission cap of 14 units and establishes the emissions standards of 11 units for plant A and 3 units for plant B.

Preparing the agency budget for the next five years : As the administrator, you will be responsible for analyzing, examining, proposing, and preparing the agency's budget for the next five years.

About nature of political compromise and self-interest : HIST 101-Modesto Junior College-the section on the slave trade being eliminated and what it says about the nature of political compromise and self-interest.

Discuss most relevant ethical issues that burberry consider : Discuss the most relevant ethical issues that Burberry should consider in planning its advertising campaigns to consumers.

How the organization founders saw an opportunity : Highlight an organization of your choosing and how it exemplifies the social entrepreneurship concepts - How the organization's founders saw an opportunity

User Account

All Pages