The cost of controlling emissions at a firm rises rapidly as the amount of emissions reduced increases. Here is a possible model: C(q) = 4200+ 90q² where q is the reduction in emissions (in pounds of pollutant per day) and C is the daily cost to the firm (in dollars) of this reduction. Government will pay subsides in the amount of $450 per pound for each pound of pollutant removed (q). For example, if you can remove q=3 pounds of pollutant, you will receive a subsidy of $450*3. How many pounds of pollutant should the firm remove each day in order to minimize Net Cost (Cost minus subsidy)?

The cost of controlling emissions at a firm rises rapidly as the amount of emissions reduced increases. Here is a possible model: C(q) = 4200+ 90q² where q is the reduction in emissions (in pounds of pollutant per day) and C is the daily cost to the firm (in dollars) of this reduction. Government will pay subsides in the amount of $450 per pound for each pound of pollutant removed (q). For example, if you can remove q=3 pounds of pollutant, you will receive a subsidy of $450*3. How many pounds of pollutant should the firm remove each day in order to minimize Net Cost (Cost minus subsidy)?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter12: Environmental Protection And Negative Externalities

Section: Chapter Questions

Problem 5SCQ: Consider two approaches to reducing emissions of CO2 into the environment from manufacturing...

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