Two Firms, Acme and FirmCo, Have Access to Five Production

question 113

Multiple Choice

Two firms, Acme and FirmCo, have access to five production processes, each of which has a different cost and gives off a different amount of pollution. The daily costs of the processes and the corresponding number of tons of smoke emitted are shown in the table below. $\begin{array}{|c|c|c|c|c|c|}\hline \text { Process } & \text { A } & \text { B } & \text { D } & \text { D } \\\hline \text { (smoke/day) } & \text { (10 tons/day) } & \text { (8 tons/day) } & \text { (6 tons/day) } & \text { (4 tons/day) } & \text { (2 tons/day) } \\\hline \text { Cost to Acme (\$/day) } & \$ 750 & \$ 800 & \$ 1,000 & \$ 1,400 & \$ 2,000 \\\hline \text { Cost to FirmCo (\$/day) } & \$ 500 & \$ 750 & \$ 1,200 & \$ 2,200 & \$ 4,000 \\\hline\end{array}$
Suppose the firms are both currently using process A. If the government requires each firm to reduce pollution by 20%, then the firms will adopt process ______, and a total of ______ tons of smoke will be emitted each day.

• A)A; 18
• B)B; 16
• C)C; 12
• D)D; 8

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Definitions:

Unilateral Contract

A unilateral contract is a type of agreement in which only one party makes a promise or undertakes a performance to induce a second party into an action, without requiring a reciprocal agreement.

UCC

The Uniform Commercial Code, a standardized set of laws and regulations designed to facilitate commercial transactions and harmonize business law across the U.S.

Section 2-207

Refers to a provision in the Uniform Commercial Code dealing with the acceptance of an offer and the terms of contracts.

Taking Advantage

Taking advantage refers to the act of using a situation or person's condition to gain a benefit, often in an unethical or unfair manner.