See attached image for marginal abatement cost table and question 2. Suppose that we are considering an industry made up of 2 firms. Their marginal abatement costs areoutlined below.Emissions (tons/week) Firm 1109876543210Marginal abatements costs ($/ton)Firm 204812162024283646580124681220242836a. Suppose that the government is imposing an emissions tax of $12 per unit of emissions. Underthis policy, what is the level of emissions from each firm? What is the total level of emissions inthe industry? Explain.b. If the tax is imposed at $12 per unit of emissions, how much does each firm spend on abatement?Explain your reasoning.

We should separate the responses to parts (a) and (b) of your inquiry in view of the estimations we…

a. Suppose that the government is imposing an emissions tax of $12 per unit of emissions. Under this policy, what is the level of emissions from each firm? What is the total level of emissions in the industry? Explain. b. If the tax is imposed at $12 per unit of emissions, how much does each firm spend on abatement? Explain your reasoning.

a. Suppose that the government is imposing an emissions tax of $12 per unit of emissions. Under this policy, what is the level of emissions from each firm? What is the total level of emissions in the industry? Explain. b. If the tax is imposed at $12 per unit of emissions, how much does each firm spend on abatement? Explain your reasoning.

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter10: Externalities

Section: Chapter Questions

Problem 5PA

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