Suppose That Two Firms, X and Y, Face the Following

question 4

Multiple Choice

Suppose that two firms, X and Y, face the following abatement costs:
MAC_X = 1.2A_X, MAC_Y = 0.3A_Y
TAC_X = 0.6A_X² TAC_Y = 0.15A_Y²
Further assume that the combined abatement standard is 40 units for both firms. Use this information for any or all of Questions .
-According to this model, if the government uses a uniform standard

• A) firm Y would face a marginal abatement cost that is higher than that for firm Y
• B) that standard would achieve a cost-effective solution
• C) firm Y should do more of the abating and firm X should do less to move closer to a cost-effective solution
• D) firm X's marginal abatement cost would be $48, and firm Y's marginal abatement cost would be $12

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