- Refer to Table 28.1.Suppose the government allows these two firms to trade pollution permits.The total cost to reduce emissions by a total of two tons could be as low as

Question

Quizplus · Accepted Answer

When firms trade pollution permits, they can achieve cost savings by allowing the firm with lower abatement costs to reduce more emissions. The total cost can be minimized to $480 by allocating reductions efficiently between the two firms.