What is the optimal level of so2 emissions from power plant

Reference no: EM133614303

Assignment:

A coal plant on the island of canary spews 100 tons of sulfur dioxide into the air, causing acid rain in the neighboring island of finch. the bird island council has determined to regulate the coal plant to mitigate the acid rain problem. the coal plant faces a marginal cost of control of (100-Q)/5, where Q is the tons of SO2 emissions (notice that 100-Q is the amount of abatement or control). The marginal damage in the form of acid rain is Q/3.

a. If the control plant does not abate its emissions, what is the total damage from the pollution?

b. What is the optimal level of SO2 emissions from the power plant?

c. Suppose the island government successfully regulates the coal plant to achieve the level of emissions from part (b). After regulation, what is the total cost of damage due to the emissions?

d. What is the total cost of abatement/control to the coal plant for reducing its emissions to the level from part b?

e. What is the increase in welfare from abating emissions to the level from part b?

Reference no: EM133614303

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