Purchase Solution

abatement levels

Not what you're looking for?

Ask Custom Question

5. 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+0.5A1
MAC2=10+2.5A2 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.

Purchase this Solution

Solution Summary

This job discusses cost effectiveness criterion.

Solution Preview

a. Prove that a uniform standard will not meet the cost effectiveness criterion.
A uniform standard will make the two firms divide the 30 units equally, and each firm has 15 units.
Then ...

Purchase this Solution


Free BrainMass Quizzes
Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.