Table 9.7 -Table 9.7 Shows the Production Cost for Two Utilities at Utilities

question 291

Multiple Choice

Table 9.7
-Table 9.7 shows the production cost for two utilities at different levels of sulfur dioxide emissions. Assume that the government issued 8 marketable pollution permits to each firm. If the two firms agree to swap one permit and split the difference between the willingness to pay and willingness to accept, what is the price of a permit?

• A) $4,500
• B) $5,500
• C) $7,250
• D) $9,750

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