Two firms, Industrio and Capitalista, have access to five production processes, each of which has a different cost and gives off a different amount of pollution. The daily costs of the processes and the corresponding number of tons of smoke emitted are shown in the table below. Both firms currently use process A, and each emits 4 tons of smoke per day. The government is considering two plans to reduce pollution: requiring both firms to reduce pollution by 25 percent or auctioning pollution permits. Each permit would entitle the owner to emit one ton of smoke per day. Without a permit, no smoke can be emitted. $$\begin{array} { | c | c | c | c | c | c | }
\hline & \text { A } & \text { B } & \text { C } & \text { D } & \text { E } \
\hline \text { Process } & \text { (smoke/day) } & \text { (4 tons/day) } & \text { (3 tons/day) } & \text { (2 tons/day) } & \text { (1 tons/day) } \
\hline \text { Cost to Industrio (\$/day) } & \$ 350 & \$ 400 & \$ 500 & \$ 700 & \$ 1,000 \
\hline \text { Cost to Capitalista (\$/day) } & \$ 225 & \$ 250 & \$ 290 & \$ 400 &\$600 \
\hline
\end{array}$$ Given that both firms are currently using process A, the cost of requiring the firms to reduce pollution by 25 percent is ______ per day.

Question

Two firms, Industrio and Capitalista, have access to five production processes, each of which has a different cost and gives off a different amount of pollution. The daily costs of the processes and the corresponding number of tons of smoke emitted are shown in the table below. Both firms currently use process A, and each emits 4 tons of smoke per day. The government is considering two plans to reduce pollution: requiring both firms to reduce pollution by 25 percent or auctioning pollution permits. Each permit would entitle the owner to emit one ton of smoke per day. Without a permit, no smoke can be emitted. $$\begin{array} { | c | c | c | c | c | c | } 
\hline & \text { A } & \text { B } & \text { C } & \text { D } & \text { E } \
\hline \text { Process } & \text { (smoke/day) } & \text { (4 tons/day) } & \text { (3 tons/day) } & \text { (2 tons/day) } & \text { (1 tons/day) } \
\hline \text { Cost to Industrio (\$/day) } & \$ 350 & \$ 400 & \$ 500 & \$ 700 & \$ 1,000 \
\hline \text { Cost to Capitalista (\$/day) } & \$ 225 & \$ 250 & \$ 290 & \$ 400 &\$600 \
\hline
\end{array}$$ Given that both firms are currently using process A, the cost of requiring the firms to reduce pollution by 25 percent is ______ per day.

Quizplus · Accepted Answer

The cost of requiring the firms to reduce pollution by 25 percent is the cost of the process that emits 3 tons of smoke per day. For Industrio, this is process C, which costs $500 per day. For Capitalista, this is process B, which costs $250 per day. The total cost is $500 + $250 = $750 per day.

Two Firms, Industrio and Capitalista, Have Access to Five Production