The three firms below have five choices for pollution control: no controls or four different technologies,W,X,Y and Z.The amount of pollution emitted and the cost of the technologies are shown in the table.
-Refer to the information above.Comparing a 25% pollution reduction for all firms to a $1400-per-ton tax,total pollution is __________ and the private cost is__________ for the $1400-per-ton tax.
A) lower;lower
B) lower;higher
C) higher;lower
D) the same;lower
E) higher;higher

Question

The three firms below have five choices for pollution control: no controls or four different technologies,W,X,Y and Z.The amount of pollution emitted and the cost of the technologies are shown in the table. 
-Refer to the information above.Comparing a 25% pollution reduction for all firms to a $1400-per-ton tax,total pollution is __________ and the private cost is__________ for the $1400-per-ton tax.
A) lower;lower 
B) lower;higher 
C) higher;lower 
D) the same;lower 
E) higher;higher

Quizplus · Accepted Answer

The correct answer is A because a 25% pollution reduction for all firms would reduce total pollution by 25%, while a $1400-per-ton tax would reduce total pollution by more than 25%. The private cost of pollution would be lower for the $1400-per-ton tax because firms would have an incentive to reduce their pollution emissions to avoid paying the tax.

The Three Firms Below Have Five Choices for Pollution Control