The Cost of Controlling Emissions at a Firm Goes Up

question 129

Multiple Choice

The cost of controlling emissions at a firm goes up rapidly as the amount of emissions reduced goes up. Here is a possible model. where x is the reduction in sulfur emissions, y is the reduction in lead emissions (in pounds of pollutant per day) , and C is the daily cost to the firm (in dollars) of this reduction. Government clean-air subsidies amount to $200 per pound of sulfur and $50 per pound of lead removed. How many pounds of pollutant should the firm remove each day to minimize the net cost (cost minus subsidy) ?

• A)1 lb of sulfur and 1 lb of lead
• B)1 lb of sulfur and 2 lb of lead
• C)1 lb of sulfur and 0.5 lb of lead
• D)0.5 lb of sulfur and 1 lb of lead
• E)1.9 lb of sulfur and 1 lb of lead

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Definitions:

Economical

Pertaining to efficient use or management of resources to prevent wasteful expenditures.

Wheel of Retailing

is a concept that illustrates how new retailing forms often start at a low price point with minimal services before evolving into more established forms with higher costs and services.

Competitive Foothold

A strategic position obtained by a company in a market that gives it an advantage over its competitors.

Wholesalers

Entities that sell products in large quantities, typically to retailers or other intermediaries, rather than to the final consumer.