Pollution (In Tons Of CO2) Cost of Removing One Ton of CO2 (Firm X)-25 $400 (Firm Y)- 25 $200 1. Refer to the table. If the federal government required that each firm reduce its pollution by 3 tons, how much would this total pollution reduction of 6 tons cost? 2. Suppose that the federal government decides to issue tradable permits for CO2 emissions such that one permit allows the firm to emit 1 ton of CO2. If the federal government issues 22 C02 tradable permits to Firm X and another 22 CO2 tradable permits to Firm Y, describe how the permits will be traded between these two firms. Specifically, identify which firm will purchase permits and which firm will sell permits, how many permits will be traded, and the acceptable trade price range of the permits. Firms X will purchase ---- Permits from Firm Y at some prices between S_-- -S_- 3. Refer to the previous question. If the permits are traded among the firms in the manner you have described, what is the total cost of 6 tons of pollution reduction?
Pollution (In Tons Of CO2) Cost of Removing One Ton of CO2 (Firm X)-25 $400 (Firm Y)- 25 $200 1. Refer to the table. If the federal government required that each firm reduce its pollution by 3 tons, how much would this total pollution reduction of 6 tons cost? 2. Suppose that the federal government decides to issue tradable permits for CO2 emissions such that one permit allows the firm to emit 1 ton of CO2. If the federal government issues 22 C02 tradable permits to Firm X and another 22 CO2 tradable permits to Firm Y, describe how the permits will be traded between these two firms. Specifically, identify which firm will purchase permits and which firm will sell permits, how many permits will be traded, and the acceptable trade price range of the permits. Firms X will purchase ---- Permits from Firm Y at some prices between S_-- -S_- 3. Refer to the previous question. If the permits are traded among the firms in the manner you have described, what is the total cost of 6 tons of pollution reduction?
Chapter1: Making Economics Decisions
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Transcribed Image Text:Pollution (In Tons Of CO2)
Cost of Removing One Ton of CO2
(Firm X)-25
$400
(Firm Y)- 25
S200
1. Refer to the table. If the federal government required that each firm reduce its pollution by 3 tons,
how much would this total pollution reduction of 6 tons cost?
2. Suppose that the federal government decides to issue tradable permits for CO2 emissions such
that one permit allows the firm to emit 1 ton of CO2. If the federal government issues 22 CO2
tradable permits to Firm X and another 22 CO2 tradable permits to Firm Y, describe how the permits
will be traded between these two firms. Specifically, identify which firm will purchase permits and
which firm will sell permits, how many permits will be traded, and the acceptable trade price range
of the permits.
Firms X will purchase --
Permits from Firm Y at some prices between $_-- - S-
3. Refer to the previous question. If the permits are traded among the firms in the manner you have
described, what is the total cost of 6 tons of pollution reduction?
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