Assume that two power plants, Firm 1 and Firm 2 release sulfur dioxide (SO2) in a small urban community that exceeds the emissions standard.  To meet the standard, 30 units of SO2 must be abated in total.  The two firms face the following abatement costs:MAC1=16+0.5A1, MAC2=10+2.5A2 where costs are measured in thousands of dollars.a. Prove that a uniform standard will not meet the cost effectiveness criterion.b. Determine how the abatement levels should be reallocated across the two firms to minimize costs.
Question:Assume that two power plants, Firm 1 and Firm 2 release sulfur dioxide (SO2) in a small urbancommunity that exceeds the emissions standard.  To…
