The figure below shows the marginal pollution abatement costs of two companies - Alpha Electric and Beta Inc.

-Refer to the figure above. Suppose the government allocates 250 pollution permits to each company and the price of each permit is $200. ________will earn ________by selling permits.
A) Alpha Electric; $1,000
B) Alpha Electric; $10,000
C) Alpha Electric; $1,000.
D) Alpha Electric; $15,000

Question

The figure below shows the marginal pollution abatement costs of two companies - Alpha Electric and Beta Inc.
 
-Refer to the figure above. Suppose the government allocates 250 pollution permits to each company and the price of each permit is $200. ________will earn ________by selling permits.
A) Alpha Electric; $1,000 
B) Alpha Electric; $10,000 
C) Alpha Electric; $1,000. 
D) Alpha Electric; $15,000

Quizplus · Accepted Answer

Alpha Electric will earn $10,000 by selling permits because it only needs 240 permits (250 allocated - 240 required = 10 surplus). Selling these 10 surplus permits at $200 each results in $2,000, not $10,000 as initially stated. The correct calculation for the number of permits sold or the earnings appears to have been misunderstood in the initial response.

The Figure Below Shows the Marginal Pollution Abatement Costs of Two