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 and these firms want to maximize profits. If the government wishes to cut discharge by 50 percent, it could do so by establishing an effluent fee of:
A) $3.00 per ton.
B) $4.50 per ton.
C) $5.50 per ton.
D) $10.00 per ton.
Correct Answer:
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