Suppose That There Are Two Firms, Each Generating Three Tons

question 295

Multiple Choice

Suppose that there are two firms, each generating three tons of SO₂. Suppose also that the government has set a target abatement level of two tons. Under a policy of uniform abatement with permits, each firm would receive

• A) two non-transferable pollution permits.
• B) two pollution permits which they could sell to each other.
• C) one pollution permit with a value equal to that firm's cost of abating one ton of SO₂.
• D) one pollution permit with a value equal to the market price for a pollution permit.

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Cruel

Causing pain or suffering intentionally, showing no compassion or mercy.

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A feeling of sorrow, unhappiness, or depression.