total abatement cost A firm discharges phosphorus into the Altamaha River. The t

Question

total abatement cost

A firm discharges phosphorus into the Altamaha River. The total abatement cost is: TAC 2A + 0.1A2. A is the units of phosphorus abated. Clark county establishes a marginal effluent fee of $4 per unit and sets the required abatement standard at 50 units. Firms do have the flexibility of either abating or paying the effluent fee in order to meet the standard. Assume firm will choose abating instead of paying effluent fee if the firm is indifferent between these two options. The firm's total cost of meeting the 50 units of abatement would be cost and the effluent fee wherever applicable. Total cost may include abatement 1) $200 O 2) $190 3) None of the other answers are correct. O 4) $140 O 5) $180 o 6) $155

Explanation / Answer

c)none of the other options are correct

As we are not taking effluent fee in to consideration, we are not using formula Marginal effluent Cost= Total cost / Abatement level of 50 units

So Total cost of 50 units will be TAC=2A+.1A2 =2*50+0.1(50)^2= $350

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