Refer to the Following Information to Answer the Following Questions

question 28

Multiple Choice

Refer to the following information to answer the following questions.
Two firms both emit a pollutant,and the government wants to reduce emissions of this pollutant.Each firm can choose to emit up to six units.As firms reduce emissions,there is a marginal cost per unit.This data is presented in the accompanying table.

-The government allocates three allowances to each firm,where each allowance allows one unit to be emitted.If both firms now emit three units each,the total cost of reducing emissions for Firm 1 is ________ and the total cost of reducing emissions for Firm 2 is ________.

• A) $30; $60
• B) $180; $360
• C) $120; $240
• D) $60; $120
• E) $30; $60.

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Definitions:

Deadweight Loss

An economic efficiency loss that occurs when market equilibrium is not achieved or when externalities are present, leading to a loss of total welfare.

Deadweight Loss

A loss of economic efficiency that can occur when the equilibrium for a good or service is not achieved or is unattainable.

Units Bought

Refers to the quantity of a particular good or service purchased by consumers or businesses.

Tax Imposed

A financial charge or other levy placed upon an individual or a legal entity by a state or a functional equivalent of a state.