The following table shows four firms, the amount each pollutes, the marginal cost for each firm to clean up pollution, and the total cost to each firm of eliminating all pollution.
The total discharge of these four companies is 300 tons. Assume there is no one else who pollutes. If the goal of the government is to reduce pollution by 50 percent, the cheapest way would be to have:
A) all four firms cut their discharge by 50 percent
B) have each firm reduce discharge by 37.5 tons.
C) have firms A and D stop discharging and allow B and C to continue.
D) have firms B and C stop discharging and allow A and D to continue.
Correct Answer:
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