Determine the cost efficient levels of emissions reduction, Microeconomics

Assignment Help:

Determine the Cost Efficient Levels of Emissions Reduction

Two firms produce a pollutant called Q.  The total cost of reducing emissions of Q are as follows for Firm 1 and Firm 2, respectively:

TC1=10+100Q12

TC2=20 + 50Q22.

This means that the marginal costs of reducing emissions of Q are as follows for Firm1 and Firm2, respectively:

MC1=200Q1

MC2=100Q2.

A. Suppose that a regulator has determined that total emissions of Q must be reduced by 21 units.  Determine the cost efficient levels of emissions reduction that should be undertaken by Firm1 and Firm2.  Remember that the equimarginal principle requires that marginal costs be equated across the two polluters for emissions reduction costs to be minimized.

B. Suppose that, instead of the cost efficient levels of emissions reduction, the regulator orders that emissions be reduced by 10.5 units for each firm (21 units total).  How much more will this allocation of emissions reductions cost, compared to the cost efficient levels?

C. Your correct answer in A is the cost efficient allocation of emissions reduction.  What else would you have to know in order to determine whether or not this is an efficient level of emissions reduction?


Related Discussions:- Determine the cost efficient levels of emissions reduction

Slutsky theorem -mathematical presentation, Slutsky Theorem - Mathematical ...

Slutsky Theorem - Mathematical Presentation: We already know from the first order conditions of utility Maximisation that,   where D ij is the co-factor of the ith ro

ECS, The prevention of major swings in economic activity can be handled mos...

The prevention of major swings in economic activity can be handled most easily by the

Find out market equilibrium price and quantity , Question Suppose you w...

Question Suppose you work for the state government of California. Due to the heavy traffic jam on I-880, the state has decided to decide to construct a new highway. To fund a p

Graphical representation of various returns, Graphical Representation of Va...

Graphical Representation of Various Returns: Diminishing Returns: If the TP curve is as shown in the adjacent Figure, then the MPL given by tanθ  is throughout less than the A

Demand curve for a consumer for coffee, Suppose the demand curve for a cons...

Suppose the demand curve for a consumer for coffee is: Q = 6 – 2P, where Q represents the number of cups per day and P is the price of coffee per cup.   Question: Suppose the

Price responsiveness of supply, On Valentine's Day, the price of roses incr...

On Valentine's Day, the price of roses increases by more than the price of greeting cards.  Why? (Hint: Consider what makes roses and cards different and how that difference might

Price floor and price ceiling, . Keep slope of supply constant and apply di...

. Keep slope of supply constant and apply different slopes of demand curve and then show what happens if control price impose. Similarly, keep demand curve constant and apply diffe

What is tradeable product, Q. What is Tradeable product? Tradeable:A pr...

Q. What is Tradeable product? Tradeable:A product (a service or good) is tradeable if its purchaser can purchase it far away from the place where it is produced. Most goods (ot

Effects of weight loss, Effects of weight loss A healthy body is required n...

Effects of weight loss A healthy body is required not only for the sake of health, but also for maintaining the standard frame of a body. A person experiencing the problem of weigh

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd