Two Firms, a and B, Each Currently Dump 50 Tons

question 371

Multiple Choice

Two firms, A and B, each currently dump 50 tons of chemicals into the local river. The government has decided to reduce the pollution and from now on will require a pollution permit for each ton of pollution dumped into the river. The government will sell 40 pollution permits for $75 each. It costs Firm A $100 for each ton of pollution that it eliminates before it reaches the river, and it costs Firm B $50 for each ton of pollution that it eliminates before it reaches the river. Neither firm produces any less output, but they both conform to the law. It is likely that between the cost of permits and the cost of additional pollution abatement,

• A)Firm B will spend $3,500.
• B)Firm A will spend $4,000.
• C)Firm A will spend $4,500.
• D)Firm B will spend $3,000.

Capacity to interpret a company's operating efficiency through turnover ratios.

Knowledge of how dividends affect a company's financial metrics.

Understanding of the impact of stock market prices on company valuation ratios.

Understand how to calculate and interpret basic financial ratios.

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Definitions:

Dependent Variable

In an experiment or study, the variable that is being tested and measured, and is expected to change as a result of the independent variable's manipulation.

Radioactive Waste

Waste material containing radioactive substances, often a byproduct of nuclear power generation or nuclear technology use.

Prediction Interval

An estimated range around a predicted value within which future observations are expected to fall with a certain probability.

Cancer Mortality

The number of deaths caused by cancer in a given population or period.