-The above figure shows the marginal benefit from pollution for two firms.If each firm receives a marketable permit to produce 25 units of pollution,which one of the following is most likely to happen?
A) Firm B will sell some pollution rights to firm A.
B) Firm A will sell some pollution rights to firm B.
C) Firm A will produce all 50 units of pollution.
D) Both firms will produce 25 units of pollution.

Question

-The above figure shows the marginal benefit from pollution for two firms.If each firm receives a marketable permit to produce 25 units of pollution,which one of the following is most likely to happen?
A) Firm B will sell some pollution rights to firm A. 
B) Firm A will sell some pollution rights to firm B. 
C) Firm A will produce all 50 units of pollution. 
D) Both firms will produce 25 units of pollution.

Quizplus · Accepted Answer

Firm B will sell some pollution rights to firm A because Firm A has a higher marginal benefit from pollution, making it more valuable for Firm A to produce additional pollution.

-The Above Figure Shows the Marginal Benefit from Pollution for Two