Microeconomics question

Posted on 2014-04-04 10:42:00 in Economics by ANTHONY HA

Firm Alpha's marginal cost of reducing pollution is $200 per ton while firm Beta's marginal cost is $150 per ton. Alpha currently emits 200 tons of pollution while Beta emits 100 tons of pollution



a) What approximate emission fee per ton is required to reduce total pollution by 40 tons?

b) What approximate amount of taxes (base on question a) would Alpha have to pay?

c) What approximate amount of taxes (base on question a) would Beta have to pay?

d) Suppose gov issues 260 tradable permits and Alpha receive 200 while Beta receive 60. Beta will buy or sell and how many? Alpha will buy or sell and how many?



I would greatly appreciate if you guys can help me out :D

Ps: if you can include explanation that would really help me understand this. Thanks

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