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Assume that two power plants,




Assume that two power plants, Firm 1 and Firm 2 release sulfur dioxide (SO2) in a small urban community that exceeds the emissions standard.? ? To meet the standard, 30 units of SO2 must be abated in total.? ? The two firms face the following abatement costs;MAC1=16+0.5A1, MAC2=10+2.5A2 where costs are measured in thousands of dollars.;a. Prove that a uniform standard will not meet the cost effectiveness criterion.;b. Determine how the abatement levels should be reallocated across the two firms to minimize costs.


Paper#21279 | Written in 18-Jul-2015

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