Suppose That There Are Three Power-Generating Plants,all of Which Generate

question 87

Multiple Choice

Suppose that there are three power-generating plants,all of which generate emissions.The table summarizes the cost of emission reduction for each firm given five different levels of pollution: $$\begin{array} { l l l l l r } \text { Tons of smoke emitted per day } & 4 & 3 & 2 & 1 & 0 \\\text { Total abatement cost, firm A } & 0 & \$ 14 & \$ 30 & \$ 50 & \$ 75 \\\text { Total abatement cost, firm B } & 0 & \$ 20 & \$ 45 & \$ 80 & \$ 120 \\\text { Total abatement cost, firm C } & 0 & \$ 25 & \$ 60 & \$ 100 & \$ 150\end{array}$$
Suppose the government requires the three firms to reduce pollution to 2 tons of smoke per day,for a total of 6 tons.This will result in a total cost of __________.

• A)$59
• B)$42
• C)$230
• D)$135

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Definitions:

Original Cost

The initial purchase price or cost of acquiring an asset including any additional expenses necessary to get it operational.

Cash Provided

The liquidity generated by a company's operations, which may include cash from revenue as well as financing and investing activities.

Financing Activities

Activities that result in changes in the size and composition of the equity capital and borrowings of an entity.

Direct Method

A way of presenting a cash flow statement where actual cash flows from operating activities are disclosed, as opposed to estimating them indirectly through differences in non-cash items.