Suppose that the current price of a marketable permit to emit one ton of gunk is $60 . For firm A, the marginal cost of reducing one ton of gunk is $50 . For firm B, the marginal cost of reducing one ton of gunk is $70 . Under a marketable permit system, _____
a. both firms will buy a permit and emit one more ton of gunk
b. firm A will buy a permit and emit one more ton of gunk, whereas firm B will reduce its emissions of gunk by one ton
c. firm B will buy a permit and emit one more ton of gunk, whereas firm A will reduce its emissions of gunk by one ton
d. both firms will reduce their emissions of gunk by one ton
e. both firms will go out of business
c
You might also like to view...
In the above table, the total fixed cost is
A) $0. B) $20. C) $30. D) $50.
If price is equal to average variable cost, a perfectly competitive firm breaks even
Indicate whether the statement is true or false
It is possible for a tax to "internalize" an externality
Indicate whether the statement is true or false
Congress expects Social Security and Medicaid to fall short of revenue that will be needed to cover promised benefits in the future. On what evidence are these expectations based?