Table 10-6
The following table shows the total costs for each of four firms (A, B, C, and D) to eliminate units of pollution from their production processes. For example, for Firm A to eliminate one unit of pollution, it would cost $46, and for Firm A to eliminate two units of pollution, it would cost a total of $103.

-Refer to Table 10-6.If the government charged a fee of $99 per unit of pollution,how many units of pollution would the firms eliminate altogether?
A) 9
B) 12
C) 15
D) 16

Question

Table 10-6
The following table shows the total costs for each of four firms (A, B, C, and D) to eliminate units of pollution from their production processes. For example, for Firm A to eliminate one unit of pollution, it would cost $46, and for Firm A to eliminate two units of pollution, it would cost a total of $103.
 
-Refer to Table 10-6.If the government charged a fee of $99 per unit of pollution,how many units of pollution would the firms eliminate altogether?
A) 9 
B) 12 
C) 15 
D) 16

Quizplus · Accepted Answer

To determine the total units of pollution that the firms would eliminate, we need to find the point at which the firms' marginal cost (the additional cost of eliminating each unit of pollution) equals the government fee of $99. 
For instance, Firm A's marginal cost to eliminate one unit of pollution is $46, and to eliminate two units of pollution, it would cost a total of $57 ($46 + $11). Therefore, for the first two units of pollution, it would make more sense for the firm to pay the fee of $99 instead of eliminating the pollution themselves. 
By looking at the table, we can determine that for all firms, the point at which the marginal cost equals $99 is at the 3rd unit of pollution. Therefore, each firm would eliminate three units of pollution at a cost of $99 per unit, resulting in a total of 15 units of pollution eliminated altogether.

Table 10-6 the Following Table Shows the Total Costs for Each of Each