The two firms listed below have five different technologies for pollution control to choose from: 1,2,3,4 and 5.The amount of pollution emitted and the cost of the technologies are shown in the table.In the absence of government oversight,the firms will pick technology 1 and emit 4 tons each.The government is considering two plans to reduce pollution: a 50% reduction by both firms or selling pollution permits.One permit entitles the owner to emit one ton of pollution.Without a permit,no pollution can be emitted.
-Refer to the information above.Suppose that the government decides to sell four permits,i.e. ,four tons of total pollution,and starts the bidding with an opening price of $30.The ultimate equilibrium price of permits is __________ with Dewpoint buying __________ and Disunion Carbonated buying __________.
A) $100;3;1
B) $100;1;3
C) $200;2;1
D) $300;1;0
E) $50;4;2

Question

The two firms listed below have five different technologies for pollution control to choose from: 1,2,3,4 and 5.The amount of pollution emitted and the cost of the technologies are shown in the table.In the absence of government oversight,the firms will pick technology 1 and emit 4 tons each.The government is considering two plans to reduce pollution: a 50% reduction by both firms or selling pollution permits.One permit entitles the owner to emit one ton of pollution.Without a permit,no pollution can be emitted. 
-Refer to the information above.Suppose that the government decides to sell four permits,i.e. ,four tons of total pollution,and starts the bidding with an opening price of $30.The ultimate equilibrium price of permits is __________ with Dewpoint buying __________ and Disunion Carbonated buying __________.
A) $100;3;1 
B) $100;1;3 
C) $200;2;1 
D) $300;1;0 
E) $50;4;2

Quizplus · Accepted Answer

The equilibrium price is $100, with Dewpoint buying 3 permits and Disunion Carbonated buying 1 permit.

The Two Firms Listed Below Have Five Different Technologies for Pollution