Suppose There Are Only Two Firms That Pollute, a and B

question 73

Multiple Choice

Suppose there are only two firms that pollute, A and B, and each emits 10 tons of waste into the air. Firm A can reduce its pollution at a cost of $100 per ton, and Firm B can reduce its pollution at a cost of $500 per ton. Each has been given an emission credit that allows it to pollute 6 tons. If firms maximize profits, what will happen?

• A) Each firm will clean up 4 tons and pollute 6 tons.
• B) Firm B will buy four credits from A; B will emit 10 tons, and A 2 tons.
• C) Firm A will buy four credits from B; A will emit 10 tons, and B 2 tons.
• D) Firm B will buy one credit from A; it will cut pollution to 7 tons, and firm A will cut it to 5 tons.

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Definitions:

Surgical Procedure

A medical operation conducted to diagnose, treat, or prevent illness, injury, or disease, involving manual and instrumental techniques.

Sensory

Relating to or involving the organs or the senses of sight, hearing, smell, taste, and touch.

Educational Process

A systematic method of teaching and learning, which aims to impart knowledge, develop skills, and foster attitudes and values.

Verifying

The process of confirming the accuracy, truth, or validity of something through examination or evidence.