Compute the private costs of this cap-and-trade program

Reference no: EM133538594

Assignment:

1. Marginal abatement functions for 2 polluting plants are: MAC1 = 100 - 4E1 and MAC2 = 50 - E2 Emissions are measured in tons per year. Government scientists believe that total emissionsfrom the two plants should not exceed 50 tons per year.

a) To reduce total emissions to 50 tons per year at the lowest possible abatement cost, how much should each plant abate?

b) Assume that each plant is allocated 25 transferable permits free of charge where one permit allows 1 ton of emissions. Which plant will buy, and which will sell its permits? How many will be traded and what will be the equilibrium permit price once trading stops? Compute the private costs of this cap-and-trade program for each plant.

c) Now suppose the plants are not allowed to trade their permits, which effectively makes it a 25-ton uniform emission standard. Compute private costs of this policy for each plant.

d) Compute the private cost savings for each plant and the total social cost savings if the firms would be allowed to trade their permits.

Reference no: EM133538594

Questions Cloud

List the name and contact information for one human service : List the name and contact information for one human service agency a human service professional could refer Susie to for support for her current issues.

Determine one social class position in a modern society : explain each of the three components that help determine one's social class position in a modern society according to Weber. Be sure to define the concepts

Discuss how we might go about developing a positive white : Describe the 3 common reactions Beverly Daniel Tatum sees when teaching her White students about racial inequalities, and discuss how we might go about

Determine your strengths and weaknesses for each role : NUR 2115- Determine your strengths and weaknesses for each role. You must have specific examples of strengths and weaknesses for each role.

Compute the private costs of this cap-and-trade program : How many will be traded and what will be equilibrium permit price once trading stops? Compute the private costs of this cap-and-trade program for each plant.

Define and discuss the differences between sex and gender : Define and discuss the differences between sex and gender

How economic efficiency could be balanced with equity : Can you help explain how economic efficiency could be balanced with equity considerations in environmental or natural resource policy making and explain why?

Discussing how culture is formed and how we recognize it : discussing how culture is formed and how we recognize it in society. A solid description of the cultural background of the individual you have interviewed.

Research the great recession that began approximately 2008 : "Panic: The Untold Story of the 2008 Financial Crisis" research the details of the "great recession" that began approximately 2008.

User Account

All Pages