Suppose that a powerplant is given a permit to pollute 10 tons of carbon into the atmosphere. As the powerplant operates, it can generate $200 of profit selling electricity per ton of carbon that it sends into the atmosphere. If the price of the carbon permit is $100 per ton, then:

A. the powerplant is better off shutting down and selling its permit.
B. the powerplant is better off buying more permits and selling more electricity.
C. the powerplant is better off selling electricity and using the permits to pollute 10 tons of carbon.
D. the powerplant is better off shutting down and buying more permits.


Answer: B

Economics

You might also like to view...

If an industry has a price leader, it is most likely to be a dominant firm

a. True b. False Indicate whether the statement is true or false

Economics

The price of oranges falls. What happens in the market for apples, which are a substitute for oranges?

A) The equilibrium price falls and the equilibrium quantity rises. B) The equilibrium price rises and the equilibrium quantity falls. C) The equilibrium price and quantity rise. D) The equilibrium price and quantity fall.

Economics

In Econland population and average labor productivity are constant. If a larger proportion of the population becomes employed workers, then total output will ________ and output per person will ________.

A. increase; increase B. decrease; remain constant C. decrease; decrease D. remain constant; remain constant

Economics

At the equilibrium price,

A. the amount buyers wish to purchase is less than the amount producers wish to sell. B. the amount buyers wish to purchase equals the amount producers wish to sell. C. the amount buyers wish to purchase is greater than the amount producers wish to sell.

Economics