In the multiple-polluter case for a pollution permit system, suppose Firm 1 and Firm 2 face marginal abatement cost functions of MAC1 = 4.5A1 and MAC2 = 2.25A2, respectively. If the government issues each firm tradeable pollution permits such that each has to abate 10 units of pollution, then, based on this allocation,
a. the two firms have no incentive to trade
b. firm 1 has an incentive to buy a permit if the price is greater than $45
c. firm 2 has an incentive to buy a permit if the price is above $22.50
d. firm 2 will be willing to sell a permit if the price is above $22.50
d. firm 2 will be willing to sell a permit if the price is above $22.50
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Suppose the elasticity of demand for a product is 0 and elasticity of supply is 1. If the government imposes a tax on the product, then
A) buyers and sellers pay exactly the same share of the tax. B) buyers pay all of the tax. C) sellers pay all of the tax. D) buyers pay a smaller share of the tax than do sellers, but both buyers and sellers pay some of the tax. E) because the elasticity of demand is zero, the government collects no revenue from this tax.
For a common resource, the marginal social cost of the resource is ________ the marginal private cost
A) greater than B) equal to C) less than D) not comparable to
Dead capital refers to
A) a capital resource that lacks clear title ownership. B) a capital resource whose owner is deceased. C) a capital resource jointly owned by more than one person. D) a capital resource that has no more useful life.
Typically, an individual takes only one newspaper from the bin because
A) of the low marginal utility of additional newspapers. B) total utility will rise with consumption of more than one newspaper. C) marginal utility increases with the first consumption of newspapers. D) there are limited amounts of newspapers in the bin.