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

-Refer to the scenario above. Suppose the government allocates 250 pollution permits to each company and the price of each permit is $200. ________ will spend ________on buying permits.
A) Beta Inc.; $1,000
B) Beta Inc.; $1,500
C) Beta Inc.; $1,000.
D) Beta Inc.; $10,000

Question

The figure below shows the marginal pollution abatement costs of two companies - Alpha Electric and Beta Inc.
 
-Refer to the scenario above. Suppose the government allocates 250 pollution permits to each company and the price of each permit is $200. ________ will spend ________on buying permits.
A) Beta Inc.; $1,000 
B) Beta Inc.; $1,500 
C) Beta Inc.; $1,000. 
D) Beta Inc.; $10,000

Quizplus · Accepted Answer

Beta Inc. needs to buy 50 additional permits (since it emits 300 units of pollution and has only been allocated 250 permits). At a price of $200 per permit, Beta Inc. will spend 50 permits * $200/permit = $10,000 on buying permits.

The Figure Below Shows the Marginal Pollution Abatement Costs of Two