Refer to the following information to answer the following questions.
Two firms both emit a pollutant,and the government wants to reduce emissions of this pollutant.Each firm can choose to emit up to six units.As firms reduce emissions,there is a marginal cost per unit.This data is presented in the accompanying table.
-The government allocates three allowances to each firm,where each allowance allows one unit to be emitted.The optimal outcome in this case is for ________ to sell one permit to the other firm,and a price that will be agreeable to both is ________.
Definitions:
Computer Components
The physical parts or elements of a computer system, like the CPU, RAM, and hard drive.
Monopsony Buyer
A market condition where there is only one buyer for many sellers, giving the buyer significant control over prices.
Marginal Expenditure
The increase in cost that arises when buying an added unit of a product or service.
Average Expenditure
The average amount spent per unit of a good or service.
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