Table 9.5
-Both firms depicted in Table 9.5 can benefit if Firm A sells its pollution permit allowing it to generate 1,000 gallons of wastewater to Firm B for

Question

Quizplus · Accepted Answer

Firm B has a marginal abatement cost of $20 per 1000 gallons of wastewater while Firm A has a marginal abatement cost of $10 per 1000 gallons of wastewater. This means that Firm B would benefit from purchasing the permit from Firm A as it would cost them less than their own marginal abatement cost. Firm A would also benefit as they would receive revenue for selling the permit. The optimal price range would be between $12 and $15 as it falls between their respective marginal abatement costs.

Table 9.5 -Both Firms Depicted in Table 9.5 Can Benefit If Firm