$$\begin{array}{l}
\begin{array} { c c c }
\hline \text { Wasle water } & \text { Firm A } & \text { Firm B } \
\hline 2,000 & \$ 100 & \$ 120 \
1,000 & \$ 103 & \$ 135 \
0 & \$ 115 & \$ 155 \
\hline
\end{array}\
\text { Table } 9.5
\end{array}$$

-Both firms depicted in Table 9.5 can benefit if firm A sells its pollution permit allowing it to generate 1,000 gallons of wastewater to firm B for:
A)a price between $12 and $15.
B)a price between $0 and $6.
C)a price greater than $20.
D)It is not possible for firms to benefit if firm A sells a permit to firm B.

Question

$$\begin{array}{l}
\begin{array} { c c c } 
\hline \text { Wasle water } & \text { Firm A } & \text { Firm B } \
\hline 2,000 & \$ 100 & \$ 120 \
1,000 & \$ 103 & \$ 135 \
0 & \$ 115 & \$ 155 \
\hline
\end{array}\
\text { Table } 9.5
\end{array}$$

-Both firms depicted in Table 9.5 can benefit if firm A sells its pollution permit allowing it to generate 1,000 gallons of wastewater to firm B for:
A)a price between $12 and $15.
B)a price between $0 and $6.
C)a price greater than $20.
D)It is not possible for firms to benefit if firm A sells a permit to firm B.

Quizplus · Accepted Answer

Firm A can sell its permit to firm B for any price between $12 and $15. At a price of $12, firm A would be indifferent between selling the permit and generating the wastewater itself. At a price of $15, firm B would be indifferent between buying the permit and generating the wastewater itself. Any price between $12 and $15 would benefit both firms.

-Both Firms Depicted in Table 9