Exhibit 31-3 -Refer to Exhibit 31-3.The Government Issues Two Pollution Permits to Two

question 180

Multiple Choice

Exhibit 31-3

-Refer to Exhibit 31-3.The government issues two pollution permits to each firm.Firm C will pay up to __________ to buy a permit from Firm A or B.

• A) $2,200
• B) $1,000
• C) $600
• D) $500

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Definitions:

Normal Goods

Goods for which demand increases as consumer income rises, and decreases as consumer income falls.

Inferior Goods

Goods for which demand decreases as consumer income rises, in contrast to normal goods, where demand increases with higher incomes.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, reflecting the sensitivity of consumers to price changes.

Quantity Supplied

The total amount of a specific good or service that is available to consumers at a given price point and time.