Suppose the Government Is Considering Two Alternative Policies to Achieve

question 3

Essay

Suppose the government is considering two alternative policies to achieve a target level of emissions for an industry of 2,000 tonnes.Option 1's approach is summarized by the marginal abatement cost curve: MAC₁ = 2,200 - E₁ and Option 2's approach is summarized by the marginal abatement cost curve: MAC₂ = 2,750 - 1.25E₂.What is the total abatement cost of achieving the target emissions under each policy? Based on this calculation,which of the two policies is the cost-effective choice?

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