Table 28.1 $\begin{array}{|c|r|r|}
\hline\begin{array}{c}
\text { Reduction in Emissions } \
\text { (in tons) }
\end{array} & \begin{array}{c}
\text { MC to Reduce Emissions by } \
\text { SteelPlant }
\end{array} & \begin{array}{c}
\text { MC to Reduce Emissions by } \
\text { Paper Plant }
\end{array} \
\hline 1 & \$ 400 & \$ 200 \
\hline 2 & 500 & 280 \
\hline 3 & 600 & 320 \
\hline
\end{array}$
Refer to Table 28.1.Suppose the government allows these two firms to trade pollution permits.The most efficient transaction would result in

Question

Table 28.1 $\begin{array}{|c|r|r|}
\hline\begin{array}{c}
\text { Reduction in Emissions } \
\text { (in tons) }
\end{array} & \begin{array}{c}
\text { MC to Reduce Emissions by } \
\text { SteelPlant }
\end{array} & \begin{array}{c}
\text { MC to Reduce Emissions by } \
\text { Paper Plant }
\end{array} \
\hline 1 & \$ 400 & \$ 200 \
\hline 2 & 500 & 280 \
\hline 3 & 600 & 320 \
\hline
\end{array}$
 Refer to Table 28.1.Suppose the government allows these two firms to trade pollution permits.The most efficient transaction would result in

Quizplus · Accepted Answer

The most efficient transaction would result in the paper plant reducing its emissions because it has a lower marginal cost (MC) for reducing emissions at each level compared to the steel plant. This means it is cheaper for the paper plant to reduce pollution than it is for the steel plant.

Table 281 Refer to Table 28