Answer to Question #110917 in Microeconomics for Stacey

Question

A steel works can cut its NOx emissions from their current level of 60 tonnes
a year according to the MAC curve
MAC A = + 40 5
; where MAC = marginal cost
of NOx abatement ($/tonne) and A = level of abatement undertaken (tonnes).
A NOx emissions tax of $ 200 per tonne is introduced. How many tonnes of
NOx abatement will the steel works undertake when the tax is introduced ?
A 34 tonnes B 28 tonnes C 32 tonnes D 6 tonnes

Answer 1

6o tonnes

MAC A=405

A NOX emissions tax $ 200 per tonne

NOX abatement when the tax is introduced will be;

200×60

=12000

12000÷405

=29.62