Under current Georgia clean air regulation, a power plant has the option of payi
ID: 1106713 • Letter: U
Question
Under current Georgia clean air regulation, a power plant has the option of paying an emission charge of $8 per unit or abating at her own marginal cost of abatement. The marginal abatement cost is defined as MAC 4+ 0.08QA. QA is the quantity of abatement. What is the total cost, including both the possible abatement cost and the possible tax payment, for this power plant if the government required standard of abatement is set at 70 units? $200 $300 $360 $460 $160 none of the other answers are correct.Explanation / Answer
Answer
We have to check where the tax and abatement cot equal to it
and before it equal use the marginal abatement cost and after it use tax
4+0.08Q=8
Q=4/0.08
=50
The cost for first 50 units is done by marginal abatement cost and remaining at constant tax of $8
the sum of arithmetic series
where
a=4.08
and
n=2
last term=4+0.08*50=8
Total cost=(50/2)*(4+8)+8*20
=300+160
=460
the total cost is $460 to reduce 70 units
option third
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