1 Suppose the owners of the three firms get together and agree on a trading price of $800 per permit.Complete the following table with the action each firm will take at this permit price and the amount of pollution each firm will eliminate.Initial Pollution Permit AllocationFinal Amount of Pollution EliminatedFirm(Tons of pollution)Action(Tons of pollution)Firm XFirm YBuy one permitFirm ZBuy two permitsDon't buy/sellSell one permitDetermine the total cost of eliminating 6 tons of polethod, and enter the amounts in the following table.Sell two permitsTotal Cost of EliminlbllutionMethod(Dollars)RegulationTradable pollution permitsIn this cise, using tradable pollution permits reduces 6 tons of pollution atusing regulation. 3. Working with Numbers and Graphs Q3Suppose the government wants to reduce the total pollution emitted by three firms. Currently, each firm is creating 4 tons of pollution, for a total of12 tons. The government is considering the following two methods to reduce total pollution to 6 tons:1. The government sets regulation specilying that each of the three firms must cut its pollution in half.2 The government allocates two tradable pollution permits to each of the three firms. Each permit allows the firm to emit 1 ton ofpollution. Assume the negotiation and exchange of permits are costless.The following table shows the cost eachy firm faces to eliminate each unit of pollution.Cost of Eliminating:Firm X Ficm YFirm ZFirst ton of pollution$280$600$950Second ton of pollution$300$720$1,650Third ton of pollution$350$880$2,500Fourth ton of pollution$450$1,050$3,550Suppose the owners of the three firms get together and agree on a trading price of $800 per permit.

1) Cost of eliminating two term of pollution by every firm, Firm X 280+300 580 Firm Y 600+720…

ete the following table with the action each firm will take at this permit price and the amount of pollution each fir Initial Pollution Permit Allocation Final Amount of Pollution Eliminates (Tons of pollution) Action (Tons of pollution) 2. Buy one permit Buy two permits Don't buy/sell Sell one permit ine the total cost of eliminating 6 tons of poll ethod, and enter the amounts in the following ta Sell two permits Total Cost of Elimin bllution Method (Dollars) Regulation

ete the following table with the action each firm will take at this permit price and the amount of pollution each fir Initial Pollution Permit Allocation Final Amount of Pollution Eliminates (Tons of pollution) Action (Tons of pollution) 2. Buy one permit Buy two permits Don't buy/sell Sell one permit ine the total cost of eliminating 6 tons of poll ethod, and enter the amounts in the following ta Sell two permits Total Cost of Elimin bllution Method (Dollars) Regulation

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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