The following table summarizes the marginal abatement cost functions for an industry with two sources of pollution.
Source Marginal Abatement Cost
A MACA=1,200-3EA
B MACB= 800-2EB
Suppose the regulator wished to reduce total industry emissions by 25% by implementing a uniform standard.
a. What is the level of emissions and abatement at each source under the uniform standard?
b. What is the total compliance cost for the industry of the uniform standard?
c. Is this a cost-effective allocation of the industry abatement target?