MAC1 = 100 – 2e1 MAC2 = 50 – 0.5e2 1. Without regulation, what is the total level of emissions Eu? 2. If a regulator wants to reduce aggregate emissions to 50 units cost-effectively, how much should each firm emit? Firm 1’s emissions level ________________ Firm 2’s emissions level ________________ 3. If a regulator wants to reduce aggregate emissions to 50 units cost-effectively, what uniform emissions tax should the regulator impose?

MAC1 = 100 – 2e1 MAC2 = 50 – 0.5e2 1. Without regulation, what is the total level of emissions Eu? 2. If a regulator wants to reduce aggregate emissions to 50 units cost-effectively, how much should each firm emit? Firm 1’s emissions level Firm 2’s emissions level 3. If a regulator wants to reduce aggregate emissions to 50 units cost-effectively, what uniform emissions tax should the regulator impose?

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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