Abatement levels should be reallocated across

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Reference no: EM1320516

Q. Assume that 2 power plants, Industry 1 also Industry 2, release sulfur dioxide (SO2)in a small urban community that exceeds the emissions standard. To meet the standard, 30 units of SO2 must be abated in total. The 2 industries face the subsequent abatement costs:

MAC1 = 16 + 0.5A1
MAC2 = 10 + 2.5A2,
where costs are measured in thousands of dollars.

a. Prove that a uniform standard will not meet the cost-effectiveness criterion.

b. Conclude how the abatement levels should be reallocated across the 2 industries to minimize costs?

Reference no: EM1320516

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