2. A polluter with MAC = 120 - 2E faces an emission tax rate of $30/units. If its marginal abatement cost function shifts down to MAC = 80 - 2E due to adoption of a new technology, then what is the amount of cost-savings achieved by the polluter from adopting the new technology? What is the maximumn amount the polluter is likely to pay for the new technology? Draw a graph to illustrate your answer.
2. A polluter with MAC = 120 - 2E faces an emission tax rate of $30/units. If its marginal abatement cost function shifts down to MAC = 80 - 2E due to adoption of a new technology, then what is the amount of cost-savings achieved by the polluter from adopting the new technology? What is the maximumn amount the polluter is likely to pay for the new technology? Draw a graph to illustrate your answer.
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter12: Environmental Protection And Negative Externalities
Section: Chapter Questions
Problem 40P: Show the market for cigarettes in equilibrium, assuming that there are no laws banning smoking in...
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