If Two Firms Pollute, and the Increase in Costs to Firm

question 146

Multiple Choice

If two firms pollute, and the increase in costs to Firm A from decreasing pollution is equal to the decrease in costs to Firm B from increasing pollution

• A) the firms cannot benefit from trading the right to pollute.
• B) the firms can benefit by trading the right to pollute.
• C) while both firms can benefit from trading, there is no way for them to determine an agreeable price.
• D) both firms will stop polluting.

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Definitions:

Death Of A Customer

Refers to the situation where a business loses a customer due to their passing away, which can have financial and operational impacts.

Authority To Accept

The legal power or permission given to an individual or entity to agree to the terms of a contract on behalf of another.

Depositary Bank

The first bank to receive a check for payment.

Check Is Drawn

The process by which a check is issued by an account holder, instructing their bank to pay a specified sum to a party named on the check.