The marginal abatement costs (MAC) for Stark and York Paper are MAC_s = 0.2e_s and MAC_Y = 0.25e_Y, where e_s and e_Y represent the amount of emissions cut by each company. The lowest cost approach to reducing 90 units of emission is for Stark to reduce its emissions by _____ units and York to reduce its emissions by _____ units. A) 45; 45 B) 50; 40 C) 30; 60 D) 60; 30

Question

Quizplus · Accepted Answer

To minimize total costs, the marginal abatement costs should be equalized. Setting 0.2e_s = 0.25e_Y and solving for e_s and e_Y with the constraint e_s + e_Y = 90 gives e_s = 50 and e_Y = 40.

The Marginal Abatement Costs (MAC) for Stark and York Paper