Two Companies, Dirty Inc

question 78

Multiple Choice

Two companies, Dirty Inc. and Filthy Inc., each of which has access to 5 different production processes, each of which has a different cost and produces a different amount of pollution. The daily costs of the processes and the number of tons of smoke emitted are shown in the table below.  
Suppose pollution is initially unregulated. If the City Council imposes a tax of $91 per day on each ton of smoke emitted, then total emissions will fall to ________ tons of smoke per day.

• A)1
• B)2
• C)4

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Definitions:

Net Assets

The total assets of an organization minus its total liabilities, representing the owners' residual interest in the company's assets.

Financial Flexibility

The ability of an entity to initiate actions and adapt to changes in its financial operations that maximize shareholders' value over time.

Resource Structure

The composition and allocation of resources within an organization or economy, including human, financial, and material resources.

Financial Structure

The mix of debt and equity that a company uses to finance its operations and growth.