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Unformatted text preview: ECN437 Exercise 7 Due Wednesday 3/28 Consider an air pollutant with the following characteristics. First, each ton of the pollutant emitted into the air reduces visibility. An economist has estimated that the social cost of lost visibility is $10 per ton of pollutant (that is, each ton of pollutant causes $10 of damage). Second, when total emissions of the pollutant from all sources rise to or above 60 tons, people begin to have respiratory problems. The economist has estimated that the additional social cost of these problems is $60 per ton of pollutant.At the moment, there are two sources emitting the pollutant. Each produces 50 tons for a total of 100 tons. Source 1 is known to be able to abate its emissions at a marginal cost given by the following equation: MCA1=2*Q1 , where MCA1 is the marginal cost and Q1 is the amount of abatement. No is the amount of abatement....
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- Spring '12