A firm has MAC = -2.5W + 250 (W: tons). If subsidy = $120 Which level of emissions does a firm set to reduce? Calculate the net benefit a firm receives?
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This is done by setting the MAC equal to the subsidy and solving for W. -2.5W + 250 = 120 -2.5W = 120 - 250 -2.5W = -130 W = -130 / -2.5 W = 52 tons So, the firm will set to reduce emissions by 52 tons. Show more…
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