Table 10-3
The following table shows the marginal costs for each of four firms (A,B,C,and D)to eliminate units of pollution from their production processes.For example,for Firm A to eliminate one unit of pollution,it would cost $54,and for Firm A to eliminate a second unit of pollution it would cost an additional $67.

-Refer to Table 10-3.If the government wanted to eliminate exactly 11 units of pollution,which of the following fees per unit of pollution would achieve that goal?
A) $75
B) $87
C) $90
D) $106

Question

Table 10-3
The following table shows the marginal costs for each of four firms (A,B,C,and D)to eliminate units of pollution from their production processes.For example,for Firm A to eliminate one unit of pollution,it would cost $54,and for Firm A to eliminate a second unit of pollution it would cost an additional $67.
 
-Refer to Table 10-3.If the government wanted to eliminate exactly 11 units of pollution,which of the following fees per unit of pollution would achieve that goal?
A) $75 
B) $87 
C) $90 
D) $106

Quizplus · Accepted Answer

To eliminate one unit of pollution, Firm A has the lowest cost at $54. To eliminate the second unit of pollution, Firm B has the lowest cost at $62. To eliminate the third unit of pollution, Firm B still has the lowest cost at $75. To eliminate the fourth unit of pollution, Firm C has the lowest cost at $79. To eliminate the fifth unit of pollution, Firm C still has the lowest cost at $87. To eliminate the sixth unit of pollution, Firm D has the lowest cost at $94. To eliminate the seventh unit of pollution, Firm D still has the lowest cost at $106. Therefore, the optimal strategy for the government would be to charge a fee of $87 per unit of pollution, since that is the marginal cost for Firm B to eliminate the 5th unit of pollution, and a total of 11 units of pollution would be eliminated.

Table 10-3 the Following Table Shows the Marginal Costs for Each of Each