The Following Table Shows Four Firms, the Amount Each Pollutes

question 57

Multiple Choice

The following table shows four firms, the amount each pollutes, the marginal cost for each firm to clean up pollution, and the total cost to each firm of eliminating all pollution. $$\begin{array} { | c | c | c | c | } \hline \text { Firm } & \begin{array} { c } \text { Total Discharge (in } \\\text { tons) }\end{array} & \begin{array} { c } \text { Marginal Cost of } \\\text { Cleanup } \\\text { (per tan) }\end{array} & \begin{array} { c } \text { Total Cost of } \\\text { Cleanup }\end{array} \\\hline \text { A } & 60 & \$ 5.00 & \$ 300 \\\hline \text { B } & 70 & \$ 8.00 & \$ 560 \\\hline \text { C } & 80 & \$ 7.50 & \$ 600 \\\hline \text { D } & 90 & \$ 4.00 & \$ 360 \\\hline\end{array}$$ The total discharge of these four companies is 300 tons. Assume there is no one else who pollutes. If the goal of the government is to reduce pollution by 50 percent, the cheapest way would be to have:

• A)all four firms cut their discharge by 50 percent
• B)have each firm reduce discharge by 37.5 tons.
• C)have firms A and D stop discharging and allow B and C to continue.
• D)have firms B and C stop discharging and allow A and D to continue.

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Definitions:

Wage Differentials

The variations in wage rates due to factors like occupation, industry, geographic location, or skills, affecting income distribution among workers.

Productivity

A measure of the efficiency of production, often quantified as the ratio of output to inputs in a manufacturing or production process.

Human Capital

The collective skills, knowledge, or other intangible assets of individuals that can be used to create economic value for the individuals, their employers, or their community.

Bilateral Monopoly

A market structure in which there is only one buyer (a monopsony) and one seller (a monopoly), negotiating over the price and quantity of a specific product or resource.