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

question 153

Multiple Choice

Refer to the data provided in Table 16.4 below to answer the following question(s) .
Table 16.4 shows the situation facing two firms, both of which are polluting. Assume that each firm emits 5 units of pollution.
Table 16.4
$$\begin{array} { | c | c | c | c | c | c | } \hline \text { Firm A } & \text { Firm A } & \text { Firm A } & \text { Firm B } & \text { Firm B } & \text { Firm B } \\\hline \begin{array} { c } \text { Reduction of } \\\text { Pollution by } \\\text { Firm A }\end{array} & \begin{array} { c } M C \text { of } \\\text { reducing } \\\text { pollution for } \\\text { Firm A }\end{array} & \begin{array} { c } T C \text { of } \\\text { reducing } \\\text { pollution for } \\\text { Firm A }\end{array} & \begin{array} { c } \text { Reduction of } \\\text { Pollution by } \\\text { Firm B }\end{array} & \begin{array} { c } M C \text { of } \\\text { reducing } \\\text { pollution for } \\\text { Firm B }\end{array} & \begin{array} { c } T C \text { of } \\\text { reducing } \\\text { pollution for } \\\text { Firm B }\end{array} \\\hline 1 & \$ 2 & \$ 2 & 1 & \$ 16 & \$ 16 \\\hline 2 & 6 & 8 & 2 & 24 & 40 \\\hline 3 & 12 & 20 & 3 & 32 & 72 \\\hline 4 & 20 & 40 & 4 & 40 & 112 \\\hline 5 & 30 & 70 & 5 & 48 & 160 \\\hline\end{array}$$
-Refer to Table 16.4. 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 and all possible trades are made, Firm A will reduce its pollution by a total of ________ units.

• A) 2
• B) 3
• C) 4
• D) 5

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Definitions:

Standard Error

A statistical measure that quantifies the amount of variability or dispersion of a sample mean relative to the true population mean.

Normal Population

A population in which the distribution of variables follows a normal (Gaussian) distribution, characterized by a symmetric bell-shaped curve.

Standard Error

A statistic that measures the dispersion of sample means around the population mean, indicative of the accuracy of the sample mean as a representation of the population mean.

Random Variable

A variable characterized by numerical outcomes derived from phenomena of chance.