Firm a and Firm B Emit 300 Tons of Pollution

question 49

Multiple Choice

Firm A and Firm B emit 300 tons of pollution each and each have marketable permits that allow each to emit 100 tons of pollution.If it costs $5,000 for Firm A to eliminate 100 tons of pollution and it costs Firm B $6,000 to eliminate 100 tons of pollution,then

• A)Firm B sells its permits to Firm A for a price above $6,000.
• B)Firm A sells its permits to Firm B for a price below $6,000.
• C)Firm A sells its permits to Firm B for a price above $6,000.
• D)Firm B sells its permits to Firm A for a price below $6,000.
• E)Neither Firm A nor Firm B sells permits because neither has extra permits.