(Solved): On a new feasible set and frontier, draw the indifference curves of the policymaker if she were to r ...

On a new feasible set and frontier, draw the indifference curves of the policymaker if she were to represent two different groups of citizens (again, we assume that all citizens in each group are identical, and the marginal utility of consumption and environmental quality are both constant). In the first group, A, citizens care more about environmental quality than consumption, and in the other group, B, citizens care more about consumption of goods and services. Explain why the optimal level of abatement costs will differ across groups.

Question One In the diagram below, we described how a policymaker representing a uniform group of identical citizens chooses the optimal amount of abatement. a 100 The ideal policymaker's indifference curves Slope: MRS X E* 62 Quality of the environment, E B Feasible set Feasible frontier Slope: MRT E with zero abatement 450 500 Abatement costs = €50 billion Consumption of goods and services (billions €)