Hand written solutions are strictly prohibited Two firms (A and B) run separate mining companies in the same forest. Both pollute the river flowing through the forest with debris. Currently, eachcompany releases 50 pounds of debris per month into the river. The table below shows the costs associated with reducing debris in 10-poundincrements.Total cost of reducing debris by 10 poundsTotal cost of reducing debris by 20 poundsTotal cost of reducing debris by 30 poundsTotal cost of reducing debris by 40 poundsTotal cost of reducing debris by 50 poundsFirm A Firm B$5$2$15$6$30$12$50 $20$75 $30 Suppose the government wants to achieve a debris reduction of 30 pounds per month (that is, reduce the amount of debris to 70pounds). Assume that if a firm is indifferent between buying a debris permit or reducing pollution, it will choose to buy thepermit. Suppose the government issues seven 10-pound permits. To release debris, a firm must hold a permit for every 10 pounds ofdebris. If all permits are sold off to the firms at a single price per permit, every month the price would be between $(lowend) and $(high end).

A debris permit is a kind of permit that the government issues to industrial units to allow a…

Suppose the government wants to achieve a debris reduction of 30 pounds per month (that is, reduce the amount of debris to 70 pounds). Assume that if a firm is indifferent between buying a debris permit or reducing pollution, it will choose to buy the permit. Suppose the government issues seven 10-pound permits. To release debris, a firm must hold a permit for every 10 pounds of debris. If all permits are sold off to the firms at a single price per permit, every month the price would be between $ (low end) and $ (high end).

Suppose the government wants to achieve a debris reduction of 30 pounds per month (that is, reduce the amount of debris to 70 pounds). Assume that if a firm is indifferent between buying a debris permit or reducing pollution, it will choose to buy the permit. Suppose the government issues seven 10-pound permits. To release debris, a firm must hold a permit for every 10 pounds of debris. If all permits are sold off to the firms at a single price per permit, every month the price would be between $ (low end) and $ (high end).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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