(Table: Pollution and Marginal Cost of Reduction) Look at the Table

question 188

Essay

(Table: Pollution and Marginal Cost of Reduction) Look at the table Pollution and Marginal Cost of Reduction.There are two large firms in your community, Big Chemical and Mega Manufacturing, and each is a significant source of pollution.Combined, they are producing 500 tons of pollution, and the EPA has determined that pollution levels should be much lower, 250 tons.The table shows the current pollution levels for each firm and the marginal cost of reducing pollution for each firm.The marginal cost is constant.a) If the EPA dictated that each firm must emit only 125 tons of pollution, how much total cost would the firms incur to meet this environmental standard?
b) If the EPA distributed 125 pollution permits to each firm, each giving the firm the right to emit one ton of pollution, which firm will sell pollution permits, and which firm will buy pollution permits?
c) Under this system of pollution permits, what is the total cost to the firms of reducing pollution to the limit of 250 total tons?

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Definitions:

Injunctive Norm

A type of social norm that describes what is commonly approved or disapproved within a culture or group.

Normative Influence

The influence of other people that leads us to conform in order to be liked and accepted by them, often resulting in public compliance but not necessarily private acceptance.

Verbal Harassment

Involves using words to belittle, demean, or assault someone, often creating an environment of fear or discomfort for the victim.

Conversion Theory

A psychological theory that suggests a minority group can influence the majority to adopt the minority's beliefs or behaviors under certain conditions.