Factory A can reduce emissions at a cost of $250 per ton. Factory B can reduce emissions at a cost of $400 per ton. In a system in which the government issues transferable pollution right at a price of $200 per ton:
A)Factory A can profit from selling its pollution rights to Factory B.
B)Both firms have an incentive to buy pollution rights.
C)Factory B can profit from selling its pollution rights to Factory A.
D)Both firms have an incentive to sell pollution rights.

Question

Factory A can reduce emissions at a cost of $250 per ton. Factory B can reduce emissions at a cost of $400 per ton. In a system in which the government issues transferable pollution right at a price of $200 per ton:
A)​Factory A can profit from selling its pollution rights to Factory B.
B)​Both firms have an incentive to buy pollution rights.
C)​Factory B can profit from selling its pollution rights to Factory A.
D)​Both firms have an incentive to sell pollution rights.

Quizplus · Accepted Answer

The Answer of Factory A can reduce emissions at a cost of $250 per ton. Factory B can reduce emissions at a cost of $400 per ton. In a system in which the government issues transferable pollution right at a price of $200 per ton:
A)​Factory A can profit from selling its pollution rights to Factory B.
B)​Both firms have an incentive to buy pollution rights.
C)​Factory B can profit from selling its pollution rights to Factory A.
D)​Both firms have an incentive to sell pollution rights.

Factory a Can Reduce Emissions at a Cost of $250