Suppose an Oil Refinery and a Paper Mill Both Pollute

question 398

Multiple Choice

Suppose an oil refinery and a paper mill both pollute a river. Under a system of marketable pollution permits, which of the following must be true in order for both companies to benefit from trading the right to pollute?

• A)They must be able to reduce pollution at exactly the same cost.
• B)It must cost the firms different amounts to reduce pollution.
• C)They must have a social conscience and must be devoted to pollution abatement.
• D)The government must direct them toward beneficial trades.

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