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

question 9

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 .
-Based on the model given, the cost-effective solution would arise if

• A) each firm abates 20 units of pollution
• B) firm X abates 8 units, and firm Y abates 32 units
• C) firm Y does all the abating because its MAC is lower
• D) firm X abates 24 units, and firm Y abates 16 units
• E) none of the above

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Definitions:

Descriptive Approaches

Methods or strategies focused on describing and understanding phenomena rather than predicting or manipulating them.

Ethical Issues

Challenges or dilemmas that require individuals or organizations to consider moral principles in their decision-making processes.

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