Sweet Steel and Molten Metal produce sulfur dioxide emissions during production.
Sweet Steel and Molten Metal produce sulfur dioxide emissions during
production. The total abatement cost (TAC) and marginal abatement cost (MAC) for each company:
Sweet Steel:TACS = 100,000 + 1eS2;MACS = 2eS
Molten Metal:TACM = 100,000 + 1.5eM2;MACM = 3eM
where eS and eM represent tons of sulfur dioxide emissions eliminated by each company. Suppose the government wants to eliminate 1,000 tons of sulfur dioxide emissions, so it mandates that each firm cut its emissions by 500 tons. What is the total cost (TACS+TACM) of reducing emissions by 1,000 tons?
Options:
$825,000$233,333$304,000$670,550
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