# Solved! Get answer or ask a different Question 11087

Suppose that two firms, X and Y, face the following abatement costs: MACX = 1.2AX, MACY = 0.3AY

TACX = 0.6AX2 TACY = 0.15AY2?Further assume that the combined abatement standard is 40 units for both firms. **Use **

**this information for any or all of Questions 42 through 45. **

42. Based on this model, if the government uses a uniform standard

a. the total abatement cost for firm X is $24

b. the total abatement cost for firm Y is $12

c. the combined total abatement cost for both firms is $1,200

d. the combined total abatement cost for both firms is $300

43. 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

44. 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

45. The cost savings associated with the cost-effective solution relative to a uniform standard equals

a. $300 b. $108

c. $10.8 d. $9.60