Table 16.1 -Producers X and Y Dump Waste into a Local River.Table

question 34

Multiple Choice

Table 16.1
-Producers X and Y dump waste into a local river.Table 16.1 shows the production costs each firm faces at different levels of waste.The government in the area has created a set of pollution permits.Each permit allows a producer to dump 100 gallons of waste.If the government issues an equal number of pollution permits to each producer,

• A) neither producer will want to sell its permits at a price of $300.
• B) Producer X will be more willing to sell its permits than will Producer Y.
• C) both producers would be willing to sell all permits at a price of $50.
• D) Producer Y will be more willing to sell its permits than will Producer X.

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Definitions:

Consideration

Something of value that is exchanged between parties in a contract, a critical element for the contract to be legally binding.

Implied Warranties

Guarantees that are not written down or explicitly stated but are understood to exist in a transaction, providing assurance that a product or service will meet certain standards.

Assignor

The party in a contract who transfers their rights or interests to another party, known as the assignee.

Assignee

An individual or entity to whom rights or obligations are transferred from another party.