Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. economics
  3. firm a: initial pollution level = 120, cost to red

Firm A: initial pollution level = 120, cost to reduce pollution 1 unit = $75 Firm B:...

70.2K

Verified Solution

Question

Economics

Firm A: initial pollution level = 120, cost to reducepollution 1 unit = $75

Firm B: initial pollution level = 150, cost to reducepollution 1 unit = $100

a. Assume that the government decides to cut pollution by 1/3,telling firms that “Starting next year, you will only be permittedto emit 2/3 as much pollution as you currently do.” What is thecost for each firm under this policy?

b. Suppose instead that the government issued permits to eachcompany, entitling them to emit up to 2/3 of their currentpollution output. Firms may buy and sell these permits. What is thepossible range of prices for which both firms would be willing tobuy/sell?

c. Assume that the firms agree to a price in the range you foundin part b. What firm buys permits and which sells? How many permitsare exchanged?

d. What is the total cost of pollution reduction now? Hint: youranswer should make sense when you compare it to part a

Answer & Explanation Solved by verified expert
3.8 Ratings (495 Votes)
a Abatement required for firm A1201340 units Cost of abatement for firm ATACa40753000 Abatement required for firm B1501350 units Cost of abatement for firm BTACb501005000 b Cost of permit will be somewhere between    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Students will be asked to formulate, define, and interpret mathematical modeling (particularly ordinary differential equation) which involves...

Advance Math
Q

Match the correct term with the description: Terms: Metal ion indicator, acid-base indicator, auxiliary complexing agent, direct,...

Chemistry
Q

Apply 1D infinite ?(?) PiB model to the π-network in butadiene (assume that the molecule is...

Chemistry
Q

How does ethnicity affect health? Be specific and give examples.  

Psychology
Q

35 The pd a cross terminals of a cell is found to be 29 volt...

Physics
Q

Use properties of the indefinite integral to express the following integral in terms of simpler...

Calculus
Q

[20] QUESTION ONE The following transactions during January 2020 relate to County Traders:...

Accounting
Q

astro Corp. sells just one product. At the end of the fiscal year 2018, Astro...

Accounting
Q

You are the senior in charge of the audit of Jewels Manufacturing Limited. The information...

Accounting
Q

The health of a company can be understood by examining its key financial ratios and...

Accounting
Q

Exercise 10-4A (Algo) Financial statement effects of an installment note LO 10-1 A partial amortization...

Accounting
Q

Omega requires a large amount of flour in 4 months time (June 2022).Regardless of 25...

Finance