The paper industry and brewery industry each emit 60 tons ofparticulates into the air. It costs the paper industry $1,000 toremove 1 ton of particulates and it costs the brewery industry$1,400 to remove 1 ton of particulates. In an effort to reduceparticulate pollution, the government gives each industrytradeable allowances worth 50 tons of particulates. We wouldexpect that:

Question

Quizplus · Accepted Answer

Since it costs the brewery industry more ($1,400) to remove a ton of particulates compared to the paper industry ($1,000), it is more cost-effective for the brewery industry to buy allowances from the paper industry. The price would logically be between the two costs, making it cheaper for the brewery industry than removing the particulates themselves and still providing an incentive for the paper industry to sell.

The Paper Industry and Brewery Industry Each Emit 60 Tons