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Following graphs show two firms' emissions discharge  schedule wiith marginal abatement costs. 

Target emissions reduction is the half of previous emissions discharge. Regulatory agency COMMANDS & CONTROL the emissions as half of previous discharge of each firm. 

Answer the following questions:

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Q.01  From the above graphs, what is marginal abatement cost of firm A? *
Q.02    What is marginal abatement cost of firm B?
Q.03   What is total abatement cost of firm A?
Q.04   What is total abatement cost of firm B?
Q.05  What is total abatement cost of the whole market composed of those two firms?

Target emissions reduction is the half of previous emissions discharge as is the previous case.

Regulatory agency this time issues the half of previous emission discharge in the form of tradable emissions permits to utilize the ETS (EMISSIONS TRADING SYSTEM).

Now they can trade this permit at their disposal.


Q.06  What is the market equilibrium price of tradable emissions permits?

Q.07 How many certificates firm A purchases to reduce emissions reduction cost?
Q.08  How much money does firm A pay for the purchase of tradable emissions permit?
Q.09  What is the total abatement cost for firm A?
Q.10     What is the total abatement cost for firm B?
Q.11  What is total abatement cost of the whole market composed of those two firms under ETS?
Q.12  From the answers provided for Q.05 & Q.11, which policy is found to be more cost effective, command & control policy or ETS?
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