For the following, assume that Plants A and B have the following marginal costs for reducing emissions:Number of units reduced Marginal costs for Plant A Marginal costs for Plant B1 3 12 5 23 7 34 9 55 11 9(a) The government tells both plants to reduce three units of output. How much does this "conventional" regulation cost each plant? Whatâs the total cost?(b) The government implements a carbon tax of $5 per unit. How much does each plant reduce? What is the total cost?(c) Which approach is cheaper? Why is the cheaper approach cheaper?
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