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envoecon2 - 9 Figure Standard Abatement With a tax Firm 1...

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Kelley Benham 2-11-08 AEC 3233 1. The MAC of a 1-unit reduction is 1. 2. The total abatement cost of a 1-unit reduction is 1. 3. The MAC of a 5-unit reduction is 5. 4. The total abatement cost of a 5-unit reduction is 5. 5. For a 10-unit reduction, you would have to set a tax of 10. 6. Figure : Firm 1 Abatement Curve 7.
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Kelley Benham 2-11-08 AEC 3233 Figure : Abatement Tax 8. Permit price is $43.75 with firm one abating 43.75 unit, and firm 2 abating 6.25.
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Kelley Benham 2-11-08 AEC 3233
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Unformatted text preview: 9. Figure : Standard Abatement With a tax Firm 1 abates the areas in purple, gray. However, with a standard of 25-units, they abate the areas in white, purple, gray, green, and pink. With a tax Firm 2 abates the areas in purple, gray, green, pink, light blue and dark blue. With a standard, they would abate the areas in purple, gray, green, pink, and red. 10. With an identical curve, no matter what the tax or permit, they would spend the exact same....
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