1. A firm's marginal abatement cost function is given by MAC = 200-5E. Suppose that, afteradopting new abatement technology, the firms marginal abatement function becomes MAC =160-4E. Costs are in dollars per tonne and emissions are in tonnes per year. The firm is given20 tradeable pollution permits (each permit allows it to emit one tonne of pollution) and thecurrent market price per permit is $100.a)Given no change in the permit price how many tonnes of pollution will the firm emit?b)What will be the firms total abatement cost? Will it buy or sell permits and how many?c) What will be the net cost to the firm after trading? What will be the net gain to the firmfrom adopting the new abatement technology

Marginal abatement cost indicates the cost of reducing negative effects on the society, like…

.A firm's marginal abatement cost function is given by MAC = 200-5E. Suppose that, after dopting new abatement technology, the firms marginal abatement function becomes MAC = 60-4E. Costs are in dollars per tonne and emissions are in tonnes per year. The firm is given O tradeable pollution permits (each permit allows it to emit one tonne of pollution) and the urrent market price per permit is $100. OGiven no change in the permit price how many tonnes of pollution will the firm emit? DWhat will be the firms total abatement cost? Will it buy or sell permits and how many? What will be the net cost to the firm after trading? What will be the net gain to the firm om adopting the new abatement technology

.A firm's marginal abatement cost function is given by MAC = 200-5E. Suppose that, after dopting new abatement technology, the firms marginal abatement function becomes MAC = 60-4E. Costs are in dollars per tonne and emissions are in tonnes per year. The firm is given O tradeable pollution permits (each permit allows it to emit one tonne of pollution) and the urrent market price per permit is $100. OGiven no change in the permit price how many tonnes of pollution will the firm emit? DWhat will be the firms total abatement cost? Will it buy or sell permits and how many? What will be the net cost to the firm after trading? What will be the net gain to the firm om adopting the new abatement technology

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter19: Externalities And Public Goods

Section: Chapter Questions

Problem 19.9P

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