Assume two power plants release Sulfur Dioxide (SO2) in Athens, GA. A1 is the abatement in firm1 and A2 is the abatement in firm 2. The total costs of abatement functions are given as,

TC1 = 1000 + 2.5(A1)^2

TC2 = 500 + 1.5 (A2)^2

Suppose the goal is that 16 units of SO2 (total abatement) must be abated in total.

1)Please calculate the total costs and marginal costs of abatement for both firms under a uniform allocation approach. Uniform allocation approach means each firm has to abate the same amount.

2)Now the local government is launching a voluntary emissions trading system, which allows polluters to achieve cost-effectiveness and meet the abatement goal. Please find the cost effective allocation of the abatements in the permit trading market. What are the total costs and the marginal costs for each firm?

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Reid WolffLv2

18 Jul 2018

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Assume that two power plants, Firm 1 and Firm 2, release arsenic in a small urban community that exceeds the emissions standard. To meet the standard, 40 units of SO2 must be abated in total. The two firms face the following abatement costs:

MAC1 = 18 + 0.7A1 MAC2 = 15 + 3.2A2,

Where costs are measured in thousands of dollars.

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

b) Determine the abatements for companies 1 and 2 under the cost-effective criterion.

c) Determine the total abatement cost for both companies under the cost-effective criterion.

d) Are there any cost savings on implementing the cost-effective criterion with respect to uniform standards? If so, please show the savings.

carmineotter908

MAC1 = 18 + 0.7A1 MAC2 = 15 + 3.2A2,

Where costs are measured in thousands of dollars.

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

b) Determine the abatements for companies 1 and 2 under the cost-effective criterion.

c) Determine the total abatement cost for both companies under the cost-effective criterion

d) Are there any cost savings on implementing the cost-effective criterion with respect to uniform standards, if so please show the savings.

magentacamel745

Question 11 One potential remedy to the tragedy of the commons is to: never allow a single individual to consume more than one percent of the common resource. criminalize the usage of common resources. allow individuals to use a common resource as long as they receive some benefit from doing so. place a common resource under private ownership. 4 points Question 12 As a result of a positional externality: contestants have a tendency to invest in a series of mutually offsetting investments in performance enhancement. there is generally an underinvestment in performance enhancement. the market price of performance enhancement materials is too high. the quality of performance in competitive situations is lower than the socially optimal level. 4 points Question 13 Which of the following statements is true regarding health insurance? Economics shows that all health related procedures should be free to individuals because the health of an individual is priceless. Total economic surplus would be larger if individuals faced an incentive to only use services when the benefit exceeds their costs. Health maintenance organizations provide an incentive for doctors to prescribe expensive nonessential services. First dollar insurance coverage has likely had very little to do with rising healthcare expenditures since World War II. 4 points Question 14 A strategy that yields a higher payoff no matter what the other players in the game choose is known as a: prisoner's strategy. dominated strategy. dominant strategy. Nash strategy. 4 points Question 15 Based on the diagram below, if the costs of hospital care are constant at $200 per day, and the individual does not incur any cost for each day for hospital care, then: the individual will stay 7 days and there will be no loss in economic surplus. the individual will stay 3 days and there will be no loss in economic surplus. the individual will stay 7 days and there will be lost economic surplus. the individual will stay 3 days and there will be lost economic surplus. 4 points Question 16 Economic research by Manning and colleagues suggests that people with deductible health insurance policies: spend substantially less on health care and have substantially worse health outcomes compared to people with first-dollar insurance coverage. spend substantially more on health care and have substantially better health outcomes compared to people with first-dollar insurance coverage. spend basically the same amount on health care and have substantially worse health outcomes compared to people with first-dollar insurance coverage. spend substantially less on health care and have no measurable difference in health outcomes compared to people with first-dollar insurance coverage. 4 points Question 17 An efficient program for reducing pollution is one for which: all polluters incur the same total costs of abatement. all polluters pay the same amount in taxes to the government. all polluters have the same marginal costs of abatement. all polluters reduce their emissions by the same amount. 4 points Question 18 Given the information on pollution abatement costs of the two firms shown below, which of the following is an efficient combination of pollution reduction? 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The U.S. requires toys imported from China to undergo testing for lead content. The U.S. imposes a tax on sugar imported from Brazil. The U.S. restricts the quantity of cars imported from Japan. 4 points Question 25 A means-tested program is a benefit program: in which benefits decline as a recipient's earned income increases. in which all individuals must undergo health screening to be eligible for benefits. in which all recipients exclusively receive benefits through in-kind transfers. that only affects the average income of a specific segment of the population. 4 points Save and Submit Click Save and Submit to save and submit. Click Save All Answers to save all answers.

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