Given two sources of SO2 emissions each emits 20 tons when unregulated) and the

ID: 1128838 • Letter: G

Question

Given two sources of SO2 emissions each emits 20 tons when unregulated) and the following Marginal Abatement costs (MAC)

Total Tons Emitted MAC of A MAC of B

20 0 0

19 4 2

18 8 4

17 12 6

16 16 8

15 20 10

14 24 12

13 28 14

12 32 16

If the regulator has determined to cut emissions from 40 to 28, what is the least cost solution?(20 points)

Least cost solution where Total emissions = 28 should be such that MAC (A) = MAC (B)

It can be seen from the table above, when MAC (A) = MAC (B) = 16, total emissions = 28

Therefore, A should emit 16 tons (cut emissions by 4 tons) and B should emit 12 tons (cut emissions by 8 tons).

Total tons emitted MAC (A) MAC (B) 20 0 0 19 4 2 18 8 4 17 12 6 16 16 8 15 20 10 14 24 12 13 28 14 12 32 16

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