Suppose there are two polluters in the same region. The government decides that total market abatement of pollution (AMKT) should be setat 46 units/year, which would significantly reduce pollution. The polluters' marginal abatement costs (MAC) and total abatement costs (TAC)are:Polluter 1: MAC, = 2.3*A, and TAC, = 1.15*(A,)?Polluter 2: MAC2 = 0.6*Az and TAC2 = 0.3"(A2)?To reach the target of 46 units/year, the government has to decide whether to use a Pigouvian tax or a uniform standard. How much wouldbe saved in abatement costs if a Pigouvian tax were used instead of a uniform standard?Answer:

The environment is polluted when the firms undertake production activity which create negative…

uppose there are two polluters in the same region. The government decides that total market abatement of pollution (AMKT) should be set t 46 units/year, which would significantly reduce pollution. The polluters' marginal abatement costs (MAC) and total abatement costs (TAC) re: Polluter 1: MAC, = 2.3*A, and TAC, = 1.15*(A,)2 Polluter 2: MAC2 = 0.6°A2 and TAC2 = 0.3"(A:)² o reach the target of 46 units/year, the government has to decide whether to use a Pigouvian tax or a uniform standard. How much would e saved in abatement costs if a Pigouvian tax were used instead of a uniform standard? nswer:

uppose there are two polluters in the same region. The government decides that total market abatement of pollution (AMKT) should be set t 46 units/year, which would significantly reduce pollution. The polluters' marginal abatement costs (MAC) and total abatement costs (TAC) re: Polluter 1: MAC, = 2.3A, and TAC, = 1.15(A,)2 Polluter 2: MAC2 = 0.6°A2 and TAC2 = 0.3"(A:)² o reach the target of 46 units/year, the government has to decide whether to use a Pigouvian tax or a uniform standard. How much would e saved in abatement costs if a Pigouvian tax were used instead of a uniform standard? nswer:

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter8: Market Failure

Section: Chapter Questions

Problem 3P

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