Refer to the Data Provided in Table 16 -Refer to Table 16

question 75

Multiple Choice

Refer to the data provided in Table 16.3 below to answer the following questions.
Table 16.3 shows the situation facing two firms, both of which are polluting. Assume that each firm emits 5 units of pollution.
Table 16.3
$$\begin{array} { | c | c | c | c | c | c | } \hline \text { Firm A } & \text { Firm A } & \text { Firm A } & \text { Firm B } & \text { Firm B } & \text { Firm B } \\\hline \begin{array} { c } \text { Reduction of } \\\text { Pollution by } \\\text { Firm A }\end{array} & \begin{array} { c } M C \text { of } \\\text { reducing } \\\text { pollution for } \\\text { Firm A }\end{array} & \begin{array} { c } \text { TC of } \\\text { reducing } \\\text { pollution for } \\\text { Firm A }\end{array} & \begin{array} { c } \text { Reduction of } \\\text { Pollution by } \\\text { Firm B }\end{array} & \begin{array} { c } M C \text { of } \\\text { reducing } \\\text { pollution for } \\\text { Firm B }\end{array} & \begin{array} { c } T C \text { of } \\\text { reducing } \\\text { pollution for } \\\text { Firm B }\end{array} \\\hline 1 & \$ 4 & \$ 4 & 1 & \$ 8 & \$ 8 \\\hline 2 & 6 & 10 & 2 & 12 & 20 \\\hline 3 & 9 & 19 & 3 & 16 & 36 \\\hline 4 & 13 & 32 & 4 & 20 & 56 \\\hline 5 & 18 & 50 & 5 & 24 & 80 \\\hline\end{array}$$
-Refer to Table 16.3. Suppose the government wants to reduce the total amount of pollution from the current level of 10 to 4. To do this, the government caps each firm's emissions at 2 units and issues 2 permits to each firm. If firms are not allowed to trade permits, what is the total cost of the pollution reduction?

• A) $30
• B) $55
• C) $58
• D) $130

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Definitions:

Stable

Refers to an object, substance, or system that remains unchanged or resists change in conditions or under pressure.

Electrically Charged

A state of having an imbalance in the number of protons and electrons, resulting in a positive or negative electrical charge.

Electrically Neutral

A state in which an object or system has an equal number of positive and negative charges, resulting in no overall net charge.

Electrons

Negatively charged subatomic particles orbiting the nucleus of an atom, involved in chemical reactions and electrical conductivity.