In the Multiple-Polluter Case for a Pollution Permit System, Suppose

question 22

Multiple Choice

In the multiple-polluter case for a pollution permit system, suppose Firm 1 and Firm 2 face marginal abatement cost functions of MAC₁ = 4.5A₁ and MAC₂ = 2.25A₂, respectively. If the government issues each firm tradeable pollution permits such that each has to abate 10 units of pollution, then, based on this allocation,

• A) the two firms have no incentive to trade
• B) firm 1 has an incentive to buy a permit if the price is greater than $45
• C) firm 2 has an incentive to buy a permit if the price is above $22.50
• D) firm 2 will be willing to sell a permit if the price is above $22.50

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The medical reason or event leading to the termination of life.

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