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

question 53

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: $$\begin{array} { l l l l l r } \text { Tons of smoke emitted per day } & 4 & 3 & 2 & 1 & 0 \\\text { Total abatement cost, firm A } & 0 & \$ 14 & \$ 30 & \$ 50 & \$ 75 \\\text { Total abatement cost, firm B } & 0 & \$ 20 & \$ 45 & \$ 80 & \$ 120 \\\text { Total abatement cost, firm C } & 0 & \$ 25 & \$ 60 & \$ 100 & \$ 150\end{array}$$
What tax,in whole dollars per ton,would have to be charged to reduce smoke to 5 tons per day?

• A)$21
• B)$26
• C)$36
• D)$41

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Definitions:

Quantity Demanded

The sum of a particular good or service that customers are ready and financially able to buy at a given price.

Productivity

The measure of the efficiency of production, often quantified as the ratio of outputs produced to inputs used in the production process.

Factor Labor

This refers to the human effort, both physical and mental, used in the production of goods and services.

Market Wage

The prevailing rate of pay for given types of work or specific occupations in a particular geographic or sectoral labor market.