Two firms can choose from five different technologies to reduce their pollution: A,B,C,D and E.The amount of pollution emitted by each technology and the cost of the technologies are shown in the table.Both firms have adopted technology A and currently emit 4 tons apiece.The government is considering two plans to reduce pollution: a 50% reduction by both firms or selling pollution permits.One permit entitles the owner to emit one ton of pollution.Without a permit,no pollution can be emitted.
$\begin{array}{lccccc}
& \text { A: } & \text { B: } & \text { C: } & \text { D: } & \text { E: } \
& 4 \text { tons } & 3 \text { tons } & 2 \text { tons } & 1 \text { ton } & \text { no pollution } \
\text { Industrio } & \$ 350 & \$ 400 & \$ 500 & \$ 700 & \$ 1000 \
\text { Capitalista } & \$ 225 & \$ 250 & \$ 290 & \$ 400 & \$ 600
\end{array}$
Suppose a permit system has been adopted and each firm has already purchased one permit.Industrio would be willing to pay up to ___ for the right to discharge a second ton of pollution,and Capitalista would be willing to pay up to __ for the right to discharge a second ton of pollution.

Question

Two firms can choose from five different technologies to reduce their pollution: A,B,C,D and E.The amount of pollution emitted by each technology and the cost of the technologies are shown in the table.Both firms have adopted technology A and currently emit 4 tons apiece.The government is considering two plans to reduce pollution: a 50% reduction by both firms or selling pollution permits.One permit entitles the owner to emit one ton of pollution.Without a permit,no pollution can be emitted.
$\begin{array}{lccccc} 
& \text { A: } & \text { B: } & \text { C: } & \text { D: } & \text { E: } \
& 4 \text { tons } & 3 \text { tons } & 2 \text { tons } & 1 \text { ton } & \text { no pollution } \
\text { Industrio } & \$ 350 & \$ 400 & \$ 500 & \$ 700 & \$ 1000 \
\text { Capitalista } & \$ 225 & \$ 250 & \$ 290 & \$ 400 & \$ 600
\end{array}$
Suppose a permit system has been adopted and each firm has already purchased one permit.Industrio would be willing to pay up to ___ for the right to discharge a second ton of pollution,and Capitalista would be willing to pay up to __ for the right to discharge a second ton of pollution.

Quizplus · Accepted Answer

Industrio would be willing to pay up to $200 because the cost difference between technology B (3 tons) and technology C (2 tons) is $500 - $400 = $100 per ton. Capitalista would be willing to pay up to $110 because the cost difference between technology B (3 tons) and technology C (2 tons) is $290 - $250 = $40 per ton.

Two Firms Can Choose from Five Different Technologies to Reduce