The government allows sulphur dioxide emissions of 4 parts per billion and has a tradable permits program. The 2 firms in the market pollute at a rate of 5 parts per billion and 6 parts per billion respectively. The 2 firms have the following costs to reduce emissions. The least expensive way to reach the government’s mandate is: Reduction of Sulphur Dioxide Cost - Firm 1 Cost - Firm 2 By 1 part per billion $200,000/year $80,000/year By 2 parts per billion $420,000/year $200,000/year By 3 parts per billion $700,000/year $340,000/year By 4 parts per billion $1,200,000/year $650,000/year Group of answer choices $400,000. $200,000. $340,000.

Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter14: Environmental Economics
Section: Chapter Questions
Problem 7SQ
Question

The government allows sulphur dioxide emissions of 4 parts per billion and has a tradable permits program. The 2 firms in the market pollute at a rate of 5 parts per billion and 6 parts per billion respectively. The 2 firms have the following costs to reduce emissions.

The least expensive way to reach the government’s mandate is:

Reduction of Sulphur Dioxide Cost - Firm 1 Cost - Firm 2
By 1 part per billion $200,000/year $80,000/year
By 2 parts per billion $420,000/year $200,000/year
By 3 parts per billion $700,000/year $340,000/year
By 4 parts per billion $1,200,000/year $650,000/year
Group of answer choices
$400,000.
$200,000.
$340,000.
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