Two Firms Can Choose from Five Different Technologies to Reduce

question 117

Multiple Choice

Two firms can choose from five different technologies to reduce their pollution: A,B,C,D and E.The amount of pollution emitted by each technology and the cost of the technologies are shown in the table.Both firms have adopted technology A and currently emit 4 tons apiece.The government is considering two plans to reduce pollution: a 50% reduction by both firms or selling pollution permits.One permit entitles the owner to emit one ton of pollution.Without a permit,no pollution can be emitted.
$$\begin{array} { l c c c c c } & \mathrm { A } : & \mathrm { B } : & \mathrm { C } : & \mathrm { D } : & \mathrm { E } : \\& 4 \text { tons } & 3 \text { tons } & 2 \text { tons } & 1 \text { ton } & \text { no pollution } \\\text { Industrio } & \$ 350 & \$ 400 & \$ 500 & \$ 700 & \$ 1000 \\\text { Capitalista } & \$ 225 & \$ 250 & \$ 290 & \$ 400 & \$ 600\end{array}$$
Suppose the government decides to sell 6 permits allowing a total of 6 tons of pollution.The government starts the bidding with an opening price of $30.What happens next?

• A)A total of five permits will be demanded,forcing the government to lower the price.
• B)Industrio will purchase all available permits at $30.
• C)Industrio will demand 3 permits and Capitalista will demand 3 permits.
• D)A total of seven permits will be demanded,forcing the government to raise the price.

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Definitions:

Internal Labor Markets

Are social mechanisms for controlling pay rates, hiring, and promotions within corporations while reducing competition between a firm’s workers and external labor supplies.

Labor Market Shelters

Labor market shelters refer to policies or measures designed to protect workers and industries from economic shocks and job losses.

Senior Personnel

Senior personnel refer to individuals holding high-level positions within an organization, typically involved in decision-making and strategic planning.

Seniority Rules

Guidelines in a workplace that determine the priorities and privileges based on the length of service of employees.