Two companies, Dirty Inc. and Filthy Inc., each of which has access to 5 different production processes, each of which has a different cost and produces a different amount of pollution. The daily costs of the processes and the number of tons of smoke emitted are shown in the table below.
Suppose pollution is initially unregulated. If the City Council imposes a tax of $91 per day on each ton of smoke emitted, then what will be the total cost to society of the resulting reduction in pollution?
A)$90
B)$180
C)$270
D)$360

Question

Two companies, Dirty Inc. and Filthy Inc., each of which has access to 5 different production processes, each of which has a different cost and produces a different amount of pollution. The daily costs of the processes and the number of tons of smoke emitted are shown in the table below.   
Suppose pollution is initially unregulated. If the City Council imposes a tax of $91 per day on each ton of smoke emitted, then what will be the total cost to society of the resulting reduction in pollution?
A)$90 
B)$180 
C)$270 
D)$360

Quizplus · Accepted Answer

If the government imposed a tax of $91 on each ton of smoke emitted, then Dirty Inc. would choose process B, and Filthy Inc. would choose process D. As a result, Dirty Inc.'s cost would rise by $90 and Filthy Inc.'s cost would rise by $180, so the total cost of this policy would be $270.

Two Companies, Dirty Inc