Complete the second column of the following table by indicating who buys and sells permits in this case. Complete the fourth column of the table with the number of permits each firm ends up with after trading with the others. Next, subtract the number of permits from the initial pollution level to determine how many units of pollution reduction each firm has to complete, and enter these values into the fifth column of the table. Next, determine the total cost of reducing the pollution levels you determined in the previous column, and enter that into the final column of the table. Finally, add up the total pollution reduction costs for each firm and enter the total amount in the final cell of the total row in the following table. Firm A B с Total Buys or Sells Initial Pollution Level 30 45 60 If permits could not be traded, firm A would have to remove units of pollution at a total cost of $ The overall cost of reducing pollution in this case is $ Permits after Trade Remaining Pollution Reduction Cost of Reducing Pollution by 1 Unit (Dollars) 5 10 20 units of pollution at a total cost of $ and firm C would have to remove , which is Total Pollution Reduction Cost (Dollars) firm B would have to remove units of pollution at a total cost of $ than with tradable permits.
Complete the second column of the following table by indicating who buys and sells permits in this case. Complete the fourth column of the table with the number of permits each firm ends up with after trading with the others. Next, subtract the number of permits from the initial pollution level to determine how many units of pollution reduction each firm has to complete, and enter these values into the fifth column of the table. Next, determine the total cost of reducing the pollution levels you determined in the previous column, and enter that into the final column of the table. Finally, add up the total pollution reduction costs for each firm and enter the total amount in the final cell of the total row in the following table. Firm A B с Total Buys or Sells Initial Pollution Level 30 45 60 If permits could not be traded, firm A would have to remove units of pollution at a total cost of $ The overall cost of reducing pollution in this case is $ Permits after Trade Remaining Pollution Reduction Cost of Reducing Pollution by 1 Unit (Dollars) 5 10 20 units of pollution at a total cost of $ and firm C would have to remove , which is Total Pollution Reduction Cost (Dollars) firm B would have to remove units of pollution at a total cost of $ than with tradable permits.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Transcribed Image Text:Complete the second column of the following table by indicating who buys and sells permits in this case. Complete the fourth column of the table with
the number of permits each firm ends up with after trading with the others. Next, subtract the number of permits from the initial pollution level to
determine how many units of pollution reduction each firm has to complete, and enter these values into the fifth column of the table. Next, determine
the total cost of reducing the pollution levels you determined in the previous column, and enter that into the final column of the table. Finally, add up
the total pollution reduction costs for each firm and enter the total amount in the final cell of the total row in the following table.
Firm
A
B
C
Total
Buys or Sells
Initial
Pollution
Level
30
45
60
If permits could not be traded, firm A would have to remove
units of pollution at a total cost of $
The overall cost of reducing pollution in this case is $
"
Permits
after Trade
Remaining
Pollution
Reduction
Cost of Reducing
Pollution by 1 Unit
(Dollars)
5
and firm C would have to remove
, which is
units of pollution at a total cost of $
10
20
firm B would have to remove
units of pollution at a total cost of $
than with tradable permits.
Total Pollution
Reduction Cost
(Dollars)
I
Transcribed Image Text:There are three industrial firms in Happy Valley.
Firm
A
B
C
Initial Pollution Level Cost of Reducing Pollution by 1 Unit
(Units)
30
45
60
(Dollars)
5
10
20
The government wants to reduce pollution to 90 units, so it gives each firm 30 tradable pollution permits.
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