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. Suppose that the government gives each company a pollution permit equal to 50 percent of its present discharge. However, companies are allowed to reduce pollution more than 50 percent and sell their permit or reduce less than 50 percent and buy a permit from another company. If firms maximize profits, what would happen?
A) Each firm would reduce pollution by 50 percent.
B) Firms A and D would eliminate pollution and sell their permits with a reasonable price to B and C, which would continue to pollute as before.
C) Firms B and C would eliminate pollution and sell their permits with a reasonable price to A and D, which would continue to pollute as before.
D) There is not enough information to answer this question.
Correct Answer:
Verified
Q62: Economists generally oppose direct regulation because:
A) it
Q63: If markets are perfectly competitive and production
Q64: A policy that requires all the people
Q65: Based on economic theory, most economists believe
Q66: In a tax incentive program, the person
Q68: The following table shows four firms,
Q69: The following table shows four firms,
Q70: The following table shows four firms,
Q71: The following table shows four firms,
Q72: An individual with a highly elastic demand
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents