Factory a Can Reduce Emissions at a Cost of $250

question 178

Multiple Choice

Factory A can reduce emissions at a cost of $250 per ton. Factory B can reduce emissions at a cost of $400 per ton. In a system in which the government issues transferable pollution right at a price of $200 per ton:

• A)​Factory A can profit from selling its pollution rights to Factory B.
• B)​Both firms have an incentive to buy pollution rights.
• C)​Factory B can profit from selling its pollution rights to Factory A.
• D)​Both firms have an incentive to sell pollution rights.