2.4Explain why, only one discharge on Uisland=240can be socio-economically optimal. Indicate the welfare benefit by redu

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2 4explain Why Only One Discharge On Uisland 240can Be Socio Economically Optimal Indicate The Welfare Benefit By Redu 1 (19.71 KiB) Viewed 56 times

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2.4Explain why, only one discharge on Uisland=240can be socio-economically optimal. Indicate the welfare benefit by reducing emissions from U-to Uislandpartly as the area of a particular triangle in Figure 1 partly as a numerical value. Enter the values of MEC and MAC at Uisland.
The production from the companies in an industry is assumed to give rise to emissions that pollute the environment and thus to external costs for the surrounding society. Figure 1 illustrates the situation. kr.30 28+ 26 MEC 24 22 20 18 16 14 12 10 8 6 4 MAC 2 04 0 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300 320 340 360 380 400 420 440 460 480 U Figure 1 Along the horizontal axis, the industry's total emissions are measured, U. The curve marked 'MEC' indicates itmarginalexternal pollution cost, MEC, while the curve marked 'MAC' indicates the industrymarginalreduction or purification costs (in English 'marginal abatement cost'), MAC, both as a function of the discharge and both measured in DKK. The formulas for resp. MEC and MAC are: 1 MEC (U) = (1) Tow and MAC (U = 30- 1 U 16 (2) 2 In a situation where the industry's emissions are not sought to be regulated influenced) by the authorities, the emissions become Us=480, because it is costly for companies to reduce emissions from here. That is, while the emission is measured from zero and to the right along the horizontal axis, the emission is measured the reductionfrom 480 and to the left. If, for example, the emission is 300, then the emission is the reduction480 - 300 = 180.