Refer Table 1 Above

question 10

Multiple Choice

Refer Table 1 above. The table reveals the marginal abatement costs of three firms related to the quantity of emissions. Each firm is now emitting 10 tons/week, so total emissions are 30 tons/week. Suppose we wish to reduce total emissions by 50 percent, to 15 tons per week. What is the cost of this reduction via the equimarginal principle?

• A) $33
• B) $69
• C) $72
• D) $96

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Definitions:

Equate Price

The action of setting two or more goods or services to have the same price.

Marginal Cost

The outlay involved in the creation of an additional unit of a good or service.

Pareto Efficient

An economic state where resources are allocated in a way that it is impossible to make any one individual better off without making at least one individual worse off.

Efficiency

A measure of how well resources are used to achieve a goal, maximizing output from given inputs without waste.