Question

Econ 548: Homework 9 Name: 1. A coal plant on the island of Canary spe acid rain in the neighboring island of Fin the coal plant to mitigate the acid rain prok (100-QV5, where is the tons of So, miem. The that 100-Q is the or control). The marginal damage in the fo form of acid rain is 0/3. a. If the coal plant does not abate its emissions, what is the total dat pollution? 100 tons of sulfur dioxide (SO) into the air, causing The Bird Island council has determined to regulate em. The coal plant faces a marginal cost of control of tions (notice that 100-Q is the amount of abatement missions, what is the total damage from the b. What is the optimal level of SO, emissions from the power plant? c. Suppose the Island government successfully regulates the coal plant to achieve the level of emissions from part (b). After regulation, what is the total cost of damage due to the emissions?

Answer 1

Solution: W Given, Coal plant of Canary spew = 1000tons of Sor cost of antrol = (100-Q)/s Marginal damage = Q13 @ If coal plant does not abate its emissime, the total damage from pollution is : Hop 1003 M2Q/2 MD - Q13 marginal damage area undey mpcurve Q 100 Total damage = (100) (200) = 5000/3 optimal level of s02 emissions from power plantis: » mc = marginal damage

100- 100-a - 813 300 - 3Q =50 Q = 300/8 :.Q = 37.5 ton ☺ ofter regulatim total cost of damage due to the emissions is : → Total cost of damage at Q = 300/8 T mp = 0/3 Total cost of damage is : = + () = 75*25 2*2*2 Q = 300 = 75+25 = (234.375) a total cost of a batement (control to the coal plant for reducing its emissions to level from part (b):

>> total cost of abatiment = 12.5 (100-37.5) = (390.62 P- 37.5 100 Atea i a=6) C12.5)(37.5) = 234.375 b= 390.62 and Area of (a+b+c) = 500013 = Area of c Net increase in social Welfare = 5000 – (390.62 + 234.375) = (1666-66-624) -(1042 0 -