Suppose Two Power Plants Pollute a River and Both Firms

question 337

Multiple Choice

Suppose two power plants pollute a river and both firms operate under a system of marketable pollution permits. If it costs Firm A $90 to reduce pollution by 800 units per day, and Firm B can reduce costs by $115 by increasing pollution by 800 units per day

• A) the firms cannot gain by trading the right to pollute.
• B) both firms can benefit if Firm A trades the right to increase pollution by 800 units to Firm B for $70.
• C) both firms can benefit if Firm B trades the right to increase pollution by 800 units to Firm A for $120.
• D) both firms can benefit if Firm A trades the right to increase pollution by 800 units to Firm B for $100.

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Definitions:

Criminal Law

A body of law that relates to crime, prescribing conduct perceived as threatening, harmful, or otherwise endangering to the property, health, safety, and moral welfare of people including oneself.

Powerful Elite

A small and privileged group of people who hold significant power, influence, or resources in a society, often shaping policies and decisions.

War On Drugs

A government-led initiative aimed at stopping illegal drug use, distribution, and trade through a strict law enforcement approach.

Black Incarceration

Refers to the disproportionately high rates of imprisonment among the Black or African American populations, often discussed in the context of systemic racism and criminal justice reform.