Firm X will (enter buy or sell) sell $ ton If the government decides to initially auction the permits off instead off giving them away, it will generate $ The market price of the permits will be 280 11200 (enter a number) 52 in revenue. permits
Firm X will (enter buy or sell) sell $ ton If the government decides to initially auction the permits off instead off giving them away, it will generate $ The market price of the permits will be 280 11200 (enter a number) 52 in revenue. permits
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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
Transcribed Image Text:Suppose there are two firms: Firm X and Firm Y. These firms are each emitting 80 tons of pollution. Firm X faces marginal
abatement cost MACx = 2.5A and Firm Y faces marginal abatement cost MACy = 35A where A is tons of pollution
abatement. The government's control authority wishes for
system and plans to initially give each firm half of the permits.
Firm X will (enter buy or sell) sell
The market price of the permits will be 280
11200
Show Transcribed Text
firms to reduce total emission to 40 tons using the Cap and Trade
If the government decides to initially auction the permits off instead off giving them away, it will generate $
in revenue.
(enter a number) 52
$
ton
permits
Show all work to get the answers listed in the boxes. The correct answers are shown so please solve for those numbers!
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