Sulfur Dioxide Discharged (Tons)Firm AFirm B10$8,000$9,000910,00012,000815,00018,000720,00027,000628,00037,000Table 16.3Table 16.3 shows the production cost for two utilities at different levels of sulfur dioxide emissions. Assume that the government issued 8 marketable pollution permits to each firm. If Firm A contemplates selling one permit to Firm B, what is Firm A's willingness to accept?
A. $3,000
B. $5,000
C. $6,000
D. $7,000
Answer: B
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Economists use elasticity to measure the responsiveness of quantity to a change in price rather than the slope of the demand curve because elasticity is
A) independent of the units of measurement. B) dependent on the units of measurement. C) easier to calculate. D) harder to calculate. E) always negative whereas the slope is always positive.
Refer to Table 4-1. The table above lists the highest prices three consumers, Tom, Dick, and Harriet, are willing to pay for a short-sleeved polo shirt. If the price of one of the shirts is $28 dollars
A) Tom will receive $12 of consumer surplus from buying one shirt. B) Harriet will receive $25 of consumer surplus since she will buy no shirts. C) Tom will buy two shirts, Dick will buy one shirt and Harriet will buy no shirts. D) Tom and Dick receive a total of $70 of consumer surplus from buying one shirt each. Harriet will buy no shirts.
When competition is present and property rights secure, people will be encouraged to
a. plunder the resources of others. b. pay the lowest possible wages. c. provide others with things that they value in exchange for income. d. Invest in other countries where markets are less competitive and property rights less secure.
When stock markets crash because of changes in the expected future sale price of an asset rather than changes in fundamental stock price determinants, economists refer to the situation as
A. God's will. B. a ghost. C. just desserts. D. a bubble.