Suppose that there are three power-generating plants,all of which generate emissions.The table summarizes the cost of emission reduction for each firm given five different levels of pollution: $\begin{array}{lllllr}
\text { Tons of smoke emitted per day } & 4 & 3 & 2 & 1 & 0 \
\text { Total abatement cost, firm A } & 0 & \$ 14 & \$ 30 & \$ 50 & \$ 75 \
\text { Total abatement cost, firm B } & 0 & \$ 20 & \$ 45 & \$ 80 & \$ 120 \
\text { Total abatement cost, firm C } & 0 & \$ 25 & \$ 60 & \$ 100 & \$ 150
\end{array}$
Suppose the government requires the three firms to reduce pollution to 2 tons of smoke per day,for a total of 6 tons.This will result in a total cost of __________.

Question

Quizplus · Accepted Answer

The total cost of abatement for the three firms at 2 tons of smoke per day is $60 + $45 + $60 = $165. However, the government is only requiring the firms to reduce pollution to a total of 6 tons, so the firms can divide the remaining 4 tons of abatement among themselves in a way that minimizes their total cost. The most efficient way to do this is for firm A to abate 2 tons, firm B to abate 1 ton, and firm C to abate 1 ton. This will result in a total cost of $30 + $20 + $25 = $75.

Suppose That There Are Three Power-Generating Plants,all of Which Generate