Consider the Environmental Problem Created by Two Paint Companies That

question 11

Essay

Consider the environmental problem created by two paint companies that release chromium wastes into a nearby stream. The state authorities set a standard for the waterway that requires a combined abatement level (A) for chromium of 15 units. Suppose that the two firms, firm 1 and firm 2, face the following marginal abatement cost equations: MAC₁ = 3.2A₁ and MAC₂ = 0.8A₂, where costs are measured in thousands of dollars.
a. If the state uses a uniform standard, show that such a ruling would not be cost-effective. Which firm should be abating more, and which firm should be abating less?
b. Now find the cost-effective solution.

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Definitions:

Impulse Control

The ability to postpone or deny the immediate response to an idea or behavior.

Materialism

A theory or attitude that physical well-being and worldly possessions constitute the greatest good and highest value in life.

Family Function

Refers to the various roles that family members play, their relationships to each other, and how they work together to fulfill emotional, economic, and social needs.

Family Functions

The roles families perform to meet the physical, emotional, and social needs of their members, such as nurturing, protection, and socialization.