need clearly explain for each question Questions 12 to 16 Firm A has a marginal
ID: 2429309 • Letter: N
Question
need clearly explain for each question
Questions 12 to 16 Firm A has a marginal pollution abatement cost of $15x while Firm B's marginal abatement cost is $10X. Please note that the cost to Firm A of reducing pollution by 1 tonne is $15, reducing a sedc ond tonne will cost 15(2)$30... The same principle holds for Firm B 12. Firm A currently emits 400 tons of pollution and firm B emits 200 tonnes of pollution. If government regulators require that each firm reduce its emissions by 50 tons, Firm A's total cost of emissions reduction will be a. $7,500 b. 12,750 C. 16,000 d. 18,750 13. Firm A currently emits 400 tons of pollution and firm B emits 200 tons of pollution. If government regulators require that each firm reduce its emissions by 50 tons, Fim B's total cost of emissions reduction will be a. $7,500 b. 12,500 c. 16,000 d. 19,125 14. Firm A currently emits 400 tons of pollution and firm B emits 200 tons of pollution. By what cost effective amount should firm A reduce its emissions if government regulators want to reduce total (Firm A's reduction Firm B's reduction) pollution by 100 tonnes? a. 20 tonnes b. 30 ?. 40 d. 60 15. Firm A currently emits 400 tons of pollution and firm B emits 200 tons of pollution. By what cost effective amount should firm B reduce its emissions if govemment regulators want to reduce total (Firm A's reduction Firm B's reduction) pollution by 100 tonnes? a. 20 tonnes b. 30 ?. 40 d. 60 16. Firm A currently emits 400 tons of pollution. What emissions fee per ton would be required to cause Firm A to optimally reduce its pollution emissions if the marginal social benefit from pollution reduction is 1500-15T (T-tons)? a. $10 b. 20 c. 50 d. 60Explanation / Answer
12)
MAC = 15 X
TC = 7.5 X^2
Substituting the values of X
= 7.5 (50)^2
= 18750
Hence, right answer is (D)
13)
MAC = 10X
TC = 5X^2
= 12,500
Right answer is (b)
14)
Marginal cost of A is relatively larger, hence when A reduces 40 and B reduces 60, MACs of both become same.
Right answer is : ( c )
15)
Applying same logic here also, B must reduce pollution equal to 60 tons.
Right answer is (D)
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