What Are Marketable Permits? Suppose There Are Two Firms in an Area,each

question 156

Essay

What are marketable permits? Suppose there are two firms in an area,each emitting tons of sulfur.The government decides on a target level of 200 tons of sulfur,and gives each firm a permit to emit 100 tons of sulfur.Suppose Firm A is very efficient and can reduce pollution by 100 tons with an abatement cost of $500.Firm B has an older plant,so it will cost Firm B $1,000 to reduce emissions by 100 tons.What will occur with marketable permits?

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Definitions:

Population

The entire group of individuals or instances about whom the data is collected for statistical analysis.

Five-period Moving Averages

A method to smooth out data by creating an average of five consecutive data points over a series of periods, often used in time series analysis.

Long-term Trend

This is a sustained movement in data over a long period, indicating a general direction in which something is developing or changing.

Time Series

Sequenced data points collected or recorded at time intervals, often analyzed to identify trends, cyclical patterns, or to forecast.