The Diagram Below Shows the Marginal Cost of Abatement for Each

The diagram below shows the marginal cost of abatement for each of two firms, A and B. Each firm is initially abating Q0 units of pollution. FIGURE 17- 6
-Refer to Figure 17- 6. Suppose that a system of tradable pollution permits is introduced into this market and the equilibrium permit price is p*. The effect will be that

A) Firm B will sell permits to Firm A, pollute less, and reduce its costs by the area 1; Firm A will buy permits from Firm B, pollute more, and increase its costs by the area 4.
B) Firm B will buy permits from Firm A, pollute less, and increase its costs by the areas 2+3; Firm A will sell permits to Firm B, pollute more, and reduce its earnings by areas 4+5.
C) Firm B will buy permits from Firm A, pollute more, and reduce its costs by the area 1; Firm A will sell permits to Firm B, pollute less, and increase its earnings by area 5.
D) Firm B will sell permits to Firm A, pollute more, and reduce its costs by the area 1; Firm A will buy permits from Firm B, pollute less, and increase its earnings by area 4.