Figure 6A -Refer to Figure 6A. Assume That Government Regulation Limits Sulfur

Figure 6A

-Refer to Figure 6A. Assume that government regulation limits sulfur dioxide emissions to 150 tons per year. Also assume that Firm 1 cannot reduce its emissions below 100 tons per year. Which of the following would apply in this situation?

A) The government would necessarily increase the emission limits to over 150 tons to be
fair.
B) The marginal control costs for firm 1 will be higher than those for firm 2.
C) The marginal control costs for firm 2 will be infinitely high.
D) The marginal control costs for firm 2 will be less than $500.
E) The marginal control costs for firm 2 will be $1000.