Refer to the Data Provided in Table 16 -Refer to Table 16

question 174

Multiple Choice

Refer to the data provided in Table 16.2 below to answer the following question(s) .
Table 16.2 shows the situation facing two firms, both of which are polluting. Assume that each firm emits 5 units of pollution.
Table 16.2
$$\begin{array} { | c | c | c | c | c | c | } \hline \text { Firm A } & \text { Firm A } & \text { Firm A } & \text { Firm B } & \text { Firm B } & \text { Firm B } \\\hline \begin{array} { c } \text { Reduction of } \\\text { Pollution by } \\\text { Firm A }\end{array} & \begin{array} { c } M C \text { of } \\\text { reducing } \\\text { pollution for } \\\text { Firm A }\end{array} & \begin{array} { c } T C \text { of } \\\text { reducing } \\\text { pollution for } \\\text { Firm A }\end{array} & \begin{array} { c } \text { Reduction of } \\\text { Pollution by } \\\text { Firm B }\end{array} & \begin{array} { c } M C \text { of } \\\text { reducing } \\\text { pollution for } \\\text { Firm B }\end{array} & \begin{array} { c } T C \text { of } \\\text { reducing } \\\text { pollution for } \\\text { Firm B }\end{array} \\\hline 1 & \$ 1 & \$ 1 & 1 & \$ 8 & \$ 8 \\\hline 2 & 3 & 4 & 2 & 12 & 20 \\\hline 3 & 6 & 10 & 3 & 16 & 36 \\\hline 4 & 10 & 20 & 4 & 20 & 56 \\\hline 5 & 15 & 35 & 5 & 24 & 80 \\\hline\end{array}$$
-Refer to Table 16.2. Suppose the government wants to reduce the total amount of pollution from the current level of 10 to 4. To do this, the government caps each firm's emissions at 2 units and issues 2 permits to each firm. If firms are allowed to trade permits, what is the total cost of the pollution reduction?

• A) $24
• B) $40
• C) $43
• D) $81

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Definitions:

Ethics Issues

Problems or situations that require individuals or organizations to choose between actions that are evaluated as right or wrong.

FSGO

The Federal Sentencing Guidelines for Organizations, a framework that incentivizes organizations in the United States to install and maintain ethics and compliance programs to mitigate punishment for offenses.

Ethical Compliance

Adhering to laws, regulations, standards, and ethical practices that are applicable to an organization's operations and conduct.

Probation

A period of supervision over an offender, ordered by the court instead of serving time in prison.