Suppose Two Power Plants Pollute a River and Both Firms

question 227

Multiple Choice

Suppose two power plants pollute a river and both firms operate under a system of marketable pollution permits. If it costs firm A $90 to reduce pollution by 800 units per day, and firm B can reduce costs by $115 by increasing pollution by 800 units per day:

• A)the firms cannot gain by trading the right to pollute.
• B)both firms can benefit if firm A trades the right to increase pollution by 800 units to firm B for $70.
• C)both firms can benefit if Firm B trades the right to increase pollution by 800 units to firm A for $120.
• D)both firms can benefit if Firm A trades the right to increase pollution by 800 units to firm B for $100.

---

Definitions:

Underextension

The overly restrictive use of words, common in early language development, where a child uses a word only for a specific object rather than for all objects that belong to a particular category.

Referential Style

A language learning approach in which individuals predominantly use language to refer to people and objects in their environment.

Holophrasing

The use of a single word by a child to express a complex idea or complete thought, typical in early language development.

Prelinguistic Communication

Communication through sounds, facial expressions, gestures, imitation, and other nonlinguistic means.