There are two firms, A and B emitting sulfur dioxide. In total, they emit 100 tons of sulfur dioxide. The EPA wants to reduce sulfur dioxide emissions by 60 tons so that the final level of emissions in only 40 tons. The table below shows the emissions and cost of abatement for each firm. If the EPA were to issue 40 tradeable pollution permits, 20 to each firm, where each pollution permit allows 1 ton of emission, what would the final allocation of permits across the two firms be if they traded permits with each other? A Each firm will have 20 permits. B Firm A will have all 40 permits. C Firm A will have 30 permits and Firm B will have 10 permits. D Firm A will have 10 permits and Firm B will have 30 permits. Company SO2 Emission Cost per ton of SO₂ reduction Firm A Firm B Total Emissions 30 tons $1,000 per ton 70 tons 100 tons $800 per ton Submit
There are two firms, A and B emitting sulfur dioxide. In total, they emit 100 tons of sulfur dioxide. The EPA wants to reduce sulfur dioxide emissions by 60 tons so that the final level of emissions in only 40 tons. The table below shows the emissions and cost of abatement for each firm. If the EPA were to issue 40 tradeable pollution permits, 20 to each firm, where each pollution permit allows 1 ton of emission, what would the final allocation of permits across the two firms be if they traded permits with each other? A Each firm will have 20 permits. B Firm A will have all 40 permits. C Firm A will have 30 permits and Firm B will have 10 permits. D Firm A will have 10 permits and Firm B will have 30 permits. Company SO2 Emission Cost per ton of SO₂ reduction Firm A Firm B Total Emissions 30 tons $1,000 per ton 70 tons 100 tons $800 per ton Submit
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter10: Externalities
Section: Chapter Questions
Problem 10PA
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