The Two Firms Listed Below Have Five Different Technologies for Pollution

question 118

Multiple Choice

The two firms listed below have five different technologies for pollution control to choose from: 1,2,3,4 and 5.The amount of pollution emitted and the cost of the technologies are shown in the table.In the absence of government oversight,the firms will pick technology 1 and emit 4 tons each.The government is considering two plans to reduce pollution: a 50% reduction by both firms or selling pollution permits.One permit entitles the owner to emit one ton of pollution.Without a permit,no pollution can be emitted.
-Refer to the information above.Suppose that the government decides to sell four permits,i.e. ,four tons of total pollution,and starts the bidding with an opening price of $30.The ultimate equilibrium price of permits is __________ with Dewpoint buying __________ and Disunion Carbonated buying __________.

• A) $100;3;1
• B) $100;1;3
• C) $200;2;1
• D) $300;1;0
• E) $50;4;2

---

Definitions:

Securities

Securities are financial instruments that represent an ownership position in a publicly-traded corporation (stock), a creditor relationship with a government or corporation (bond), or rights to ownership as represented by an option.

Cash Flows

The movement of money into and out of a business, project, or financial product.

Investors

Entities or individuals that commit money with the hope of achieving financial gains.

Theoretical Roots

Fundamental concepts and theories that provide the basis for a particular field of study or discipline.