Figure 10-7 -Two Firms, a and B, Each Currently Emit 100 Tons

question 136

Multiple Choice

Figure 10-7
-Two firms, A and B, each currently emit 100 tons of chemicals into the air. The government has decided to reduce the pollution and from now on will require a pollution permit for each ton of pollution emitted into the air. The government gives each firm 40 pollution permits, which it can either use or sell to the other firm. It costs Firm A $200 for each ton of pollution that it eliminates before it is emitted into the air, and it costs Firm B $100 for each ton of pollution that it eliminates before it is emitted into the air. After the two firms buy or sell pollution permits from each other, we would expect that Firm A will emit

• A)20 fewer tons of pollution into the air, and Firm B will emit 100 fewer tons of pollution into the air.
• B)100 fewer tons of pollution into the air, and Firm B will emit 20 fewer tons of pollution into the air.
• C)50 fewer tons of pollution into the air, and Firm B will emit 50 fewer tons of pollution into the air.
• D)20 more tons of pollution into the air, and Firm B will emit 100 fewer tons of pollution into the air.

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Definitions:

Self-efficacy

A person's belief in their ability to succeed in specific situations or accomplish a task.

Enactive Attainment

The process of learning new skills or behaviors through direct experience and practice.

Activity

Actions or tasks performed by individuals, often contributing to achieving a particular goal or purpose.

Human Nature

The general psychological characteristics, feelings, and behavioral traits of humankind, regarded as shared by all humans.