Use the Following to Answer Questions

question 200

Multiple Choice

Use the following to answer questions:
Exhibit: EPA Regulations
There are two firms: Company A and Company B. The EPA enforces regulations saying that neither firm can release more than 10 units of pollutants. Company A currently releases 10 units and Company B releases 11 units. The EPA requires B to reduce its pollution by 1 unit-the company can do this, but at a cost of $1,000. Company A, however, can reduce pollution by 1 unit for a cost of $400. Company B wants to save money by trading allowances with Company A. After negotiations, Company A agrees to sell one unit of pollutant to Company B for $650.
-(Exhibit: EPA Regulations) Refer to the exhibit. How do both firms profit from trading allowances?

• A) A gains $650, and B saves $550.
• B) A gains $250, and B saves $350.
• C) A gains $650, and B saves $1,100.
• D) A gains $1,050, and B saves $550.

---

Definitions:

Reference Group

One or more persons whom an individual uses as a basis for comparison regarding beliefs, feelings, and behaviors.

Indirect Influence

The subtle, non-direct impact that an entity or action may have on people's decisions, behaviors, or outcomes without explicit instruction or direct intervention.

Consumer Reports

Publications that review and provide advice about products and services based on thorough testing and assessments.

Unbiased Source

An information provider regarded as impartial, not influenced by personal feelings or interests, crucial for ensuring credibility.