Two firms, Acme and FirmCo, have access to five production processes, each of which has a different cost and gives off a different amount of pollution. The daily costs of the processes and the corresponding number of tons of smoke emitted are shown in the table below.
Suppose the firms are both currently using process A. If the government imposes a tax of $110 per ton of smoke emitted, a total of ________ tons of smoke will be emitted each day, and the total cost to society of this policy will be ________ per day.
A)14; $500
B)16; $250
C)18; $50
D)20; $0

Question

Two firms, Acme and FirmCo, have access to five production processes, each of which has a different cost and gives off a different amount of pollution. The daily costs of the processes and the corresponding number of tons of smoke emitted are shown in the table below.   
Suppose the firms are both currently using process A. If the government imposes a tax of $110 per ton of smoke emitted, a total of ________ tons of smoke will be emitted each day, and the total cost to society of this policy will be ________ per day.
A)14; $500 
B)16; $250 
C)18; $50 
D)20; $0

Quizplus · Accepted Answer

With a tax of $110 per ton, Acme will adopt process C and FirmCo will stay with process A. The cost to Acme of moving from process A to C is $250.

Two Firms, Acme and FirmCo, Have Access to Five Production