Firm A currently dumps 161 tons of chemicals into the local river. Firm B currently dumps 127 tons of chemicals into the local river. The government has decided to reduce the pollution and from now on will require a pollution permit for each ton of pollution dumped into the river. The government gives Firm A 13 pollution permits and gives Firm B 43 pollution permits. The abatement costs of one ton of pollution is $175 for Firm A and $60 for Firm B. What would be the total cost of reducing pollution, if the firms are allowed to trade permits between each other?
Firm A currently dumps 161 tons of chemicals into the local river. Firm B currently dumps 127 tons of chemicals into the local river. The government has decided to reduce the pollution and from now on will require a pollution permit for each ton of pollution dumped into the river. The government gives Firm A 13 pollution permits and gives Firm B 43 pollution permits. The abatement costs of one ton of pollution is $175 for Firm A and $60 for Firm B. What would be the total cost of reducing pollution, if the firms are allowed to trade permits between each other?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Firm A currently dumps 161 tons of chemicals into the local river. Firm B currently dumps 127 tons of chemicals into the local river. The government has decided to reduce the pollution and from now on will require a pollution permit for each ton of pollution dumped into the river. The government gives Firm A 13 pollution permits and gives Firm B 43 pollution permits. The abatement costs of one ton of pollution is $175 for Firm A and $60 for Firm B. What would be the total cost of reducing pollution, if the firms are allowed to trade permits between each other?
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