Two companies, Dirty Inc. and Filthy Inc., each of which has access to 5 different production processes, each of which has a different cost and produces a different amount of pollution. The daily costs of the processes and the number of tons of smoke emitted are shown in the table below. $$\begin{array} { | c | c | c | c | c | c | }
\hline \text { Process } & \text { A } & \text { B } & \text { C } & \text { D } & \text { E } \
\hline \text { (smoke/day) } & \text { (4 tons/day) } & \text { (3 tons/day) } & \text { (2 tons/day) } & \text { (1 ton/day) } & \text { (0ns/day) } \
\hline \text { Cost to Dirty Inc. (\$/day) } & \$ 110 & \$ 200 & \$ 380 & \$ 740 & \$ 1,460 \
\hline \text { Cost to Filthy Inc. (\$/day) } & \$ 400 & \$ 430 & \$ 490 & \$ 580 &\$700 \
\hline
\end{array}$$ Suppose pollution is initially unregulated. If the City Council imposes a tax of $91 per day on each ton of smoke emitted, then total emissions will fall to ______ tons of smoke per day.

Question

Two companies, Dirty Inc. and Filthy Inc., each of which has access to 5 different production processes, each of which has a different cost and produces a different amount of pollution. The daily costs of the processes and the number of tons of smoke emitted are shown in the table below. $$\begin{array} { | c | c | c | c | c | c | } 
\hline \text { Process } & \text { A } & \text { B } & \text { C } & \text { D } & \text { E } \
\hline \text { (smoke/day) } & \text { (4 tons/day) } & \text { (3 tons/day) } & \text { (2 tons/day) } & \text { (1 ton/day) } & \text { (0ns/day) } \
\hline \text { Cost to Dirty Inc. (\$/day) } & \$ 110 & \$ 200 & \$ 380 & \$ 740 & \$ 1,460 \
\hline \text { Cost to Filthy Inc. (\$/day) } & \$ 400 & \$ 430 & \$ 490 & \$ 580 &\$700 \
\hline
\end{array}$$ Suppose pollution is initially unregulated. If the City Council imposes a tax of $91 per day on each ton of smoke emitted, then total emissions will fall to ______ tons of smoke per day.

Quizplus · Accepted Answer

With a $91 tax per ton of smoke, companies will choose the least costly option. Dirty Inc. will choose Process D (1 ton/day) as it costs $740 + $91 = $831, cheaper than Process C with tax. Filthy Inc. will choose Process E (0 tons/day) as it costs $700, cheaper than any taxed process. Total emissions: 1 ton/day.

Two Companies, Dirty Inc Suppose Pollution Is Initially Unregulated