Task: Assume that scientific studies provide you with the following information concerning the benefits and costs of sulfur dioxide emissions (E) which are measured in millions of tons.
MAC = 500 - 20 E
MD = 200 + 5E
(1) What is the socially efficient level of emissions abatement? Solve and graph in the space below.
(2) What are the marginal damages and marginal costs of abatement at the socially efficient level of abatement? Show your work below.
MD = MAC =
(3) What are the total net benefits to society at the optimal level of emissions abatement? Show your work below.
(4) What happens to the marginal damages, marginal abatement costs, and total net benefits if 1 million more tons are abated compared to (a)? Show your work.
MD = MAC =
Total Net Benefits =
(5) What happens to the marginal damages, marginal abatement costs, and total net benefits if 1 million fewer tons are abated compared to (a)? Show your work.
MD = MAC =
Total Net Benefits =