Question

Two power plants provide power to Chapel Hill residents: plant UNC and plant Duke. Both plants burn coal to produce electricity, and consequently produce smog as a by-product. The total benefit of smog abatement to Chapel Hill is 100(xU + xD). The UNC power plant could reduce its smog at a total cost of:
cU (xU )= 5x^2V

where xU indicates the total number of units of smog abated by UNC.

The Duke plant is slightly less efficient, and its total cost of reducing smog by is:

cD(xD)= 7x^2D+ 10xD

Required:
Calculate the socially efficient levels of abatement for each power plant.

Answer 1

Answer:

a. The socially efficient levels of abatement for UNC power plant is 10.

Explanation:

Note: See the attached Microsoft word file for the calculations of the anwers above.