2. Three factories are each emitting eight tons of waste into a lake. The state’s pollution authority would like to cut the total emissions by twelve tons. The factories have the following marginal cost of abatement schedules: Tons Abated MCA MCB MCC 1 $1 $3 $11 2 $4 $6 $14 3 $7 $9 $17 4 $10 $12 $20 5 $13 $15 $23 6 $16 $18 $26 7 $19 $21 $29 8 $22 $24 $32 A. One way to reduce emissions by twelve tons would be to have each factory reduce emissions by four tons. What would be the total cost of this? B. What is the lowest cost way of reducing emissions by twelve tons? How much abatement does each factory do and how much does this save over the answer from part A? C. What per ton emission fee would lead to a twelve-ton reduction in emissions? D. If twelve tons (24 – 12 = 12) of emissions permits were sold at auction, how many would each of the three emitters purchase and what would be the equilibrium price of a permit? E. How does your answer to part D relate to your answers to parts B and C? F. Should the sales revenue from an auction or other type of permit sale be included as a benefit of the permit system? Explain why or why not.