Two plants are emitting a uniformly mixed polllutant called gunk into the beautiful sky over Tourist Town. The city government decides it can tolerate total emission of no more than 100 kg of gunk per day. Plant G has marginal reduction costs of 100 - 4x and is currently polluting at a level of 25 while plant K has marginal reduction costs of 150 - y and currently pollutes at a level of 150 (x and y are the level of emissions at each plant).
Q: What is the cost-effective polltuion level for each plant if total pollution must equal 100? Suppose the city government knows marginal reduction costs at the two plants. In this case, could the city obtain cost-effective pollution reduction using a CAC approach? If so, how?