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In: Economics

The aggregate MAC function for some polluter is given by where E is measured in millions...


The aggregate MAC function for some polluter is given by where E is measured in millions of tons, and the MD function is given by MD = 2E.   

Graph both functions and solve for the socially-efficient level of emissions.

What size emissions tax per ton is needed to achieve the socially-efficient level of emissions? Explain.


Compute the total tax bill and total abatement cost to polluters if they reduced their emissions to the socially-efficient level. What is the net gain to society from this tax policy?

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Expert Solution

Rahul Sunny answered 1 year ago
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