Suppose there are three power-generating plants, each of which has access to 5 different production processes. The table below summarizes the cost of each production process and the corresponding number of tons of smoke emitted each. $\begin{array}{|c|c|c|c|c|c|}
\hline \text { Process } & \text { A } & \text { B } & \text { C } & \text { D } & \text { E } \
\text { (smoke/day) } & \text { (4 tons/day) } & \text { (3 tons/day) } & \text { (2 tons/day) } & (1 \text { ton/day) } & \text { (0 tons/day) } \
\hline \text { Cost to Firm } X(\$ / \text { day) } & \$ 500 & \$ 514 & \$ 530 & \$ 555 & \$ 585 \
\hline \text { Cost to Firm Y (\$/day) } & \$ 400 & \$ 420 & \$ 445 & \$ 480 & \$ 520 \
\hline \text { Cost to Firm Z(\$/day) } & \$ 300 & \$ 325 & \$ 360 & \$ 400 & \$ 550 \
\hline
\end{array}$
Suppose the government requires each firm to reduce pollution to 2 tons of smoke per day, so that total daily smoke emission is 6 tons. The total cost to society of this policy will be ______ per day.
A)$59
B)$42
C)$230
D)$135

Question

Suppose there are three power-generating plants, each of which has access to 5 different production processes. The table below summarizes the cost of each production process and the corresponding number of tons of smoke emitted each. $\begin{array}{|c|c|c|c|c|c|}
\hline \text { Process } & \text { A } & \text { B } & \text { C } & \text { D } & \text { E } \
\text { (smoke/day) } & \text { (4 tons/day) } & \text { (3 tons/day) } & \text { (2 tons/day) } & (1 \text { ton/day) } & \text { (0 tons/day) } \
\hline \text { Cost to Firm } X(\$ / \text { day) } & \$ 500 & \$ 514 & \$ 530 & \$ 555 & \$ 585 \
\hline \text { Cost to Firm Y (\$/day) } & \$ 400 & \$ 420 & \$ 445 & \$ 480 & \$ 520 \
\hline \text { Cost to Firm Z(\$/day) } & \$ 300 & \$ 325 & \$ 360 & \$ 400 & \$ 550 \
\hline
\end{array}$
 Suppose the government requires each firm to reduce pollution to 2 tons of smoke per day, so that total daily smoke emission is 6 tons. The total cost to society of this policy will be ______ per day.
A)$59
B)$42
C)$230
D)$135

Quizplus · Accepted Answer

The total cost to society is the sum of the costs to the three firms. The cost to each firm is the cost of the production process that it chooses, plus the cost of any pollution abatement equipment that it must install. Since the government requires each firm to reduce pollution to 2 tons of smoke per day, each firm must install pollution abatement equipment that costs $100 per day. Therefore, the total cost to society is $300 + $100 + $300 + $100 + $300 + $100 = $135 per day.

Suppose There Are Three Power-Generating Plants, Each of Which Has