Below are the marginal costs of abating pollution for three firms in an industry, based on their emissions levels. Each firm is now emitting 10 tons/week, so total emissions are 30 tons/week. Suppose we wish to reduce total emissions by 50 percent, to 15 tons per week in this industry.
Marginal Abatement Costs ($/ton) Emissions (tons/week)
Firm 1 Firm 2 Firm 3
10 0 0
9 5 1
8 9 3
7 12 5
6 14 7
5 20 9
4 27 11
3 35 13
2 44 15
1 54 17
0 65 19
Question 1: How much pollution will each firm be able to release if we use the equiproportionate method of reductions (i.e. reduction split evenly)?
Firm 1: [ Select ] ["5", "10", "8", "7", "3"]
Firm 2: [ Select ] ["5", "7", "9", "2", "4"]
Firm 3: [ Select ] ["7", "9", "5", "8", "6", "4"]
Question 2: What is the total cost of emission reductions for each firm if we use the equiproportionate reduction method (i.e. reduction split evenly)?
Firm 1: [ Select ] ["14", "176", "122", "26", "60"]
Firm 2: [ Select ] ["49", "9", "25", "1", "16"]
Firm 3: [ Select ] ["24", "17", "11", "41", "3"]
Question 3: How much pollution will each firm be able to release if we use the equimarginal reduction method (i.e. marginal cost across firms is equalized)?
Firm 1: [ Select ] ["3", "5", "6", "10", "8"]
Firm 2: [ Select ] ["9", "4", "7", "2", "5"]
Firm 3: [ Select ] ["2", "7", "4", "9", "5"]
Question 4: What is the total cost of emission reductions for each firm if we use the equimarginal reduction method (i.e. marginal cost across firms is equalized)?
Firm 1: [ Select ] ["26", "14", "87", "5", "60"]
Firm 2: [ Select ] ["9", "1", "16", "25", "49"]
Firm 3: [ Select ] ["24", "41", "11", "3", "17"]