There are three industrial plants in Simontown: Plant A B C Current Pollution Level Cost of Reducing Pollution by One Pound 70 pounds 80 pounds 50 pounds $20 $25 $10 The government passes a cap-and-trade policy, giving each plant 40 tradeable permits, each permit allows for one pound of pollution emissions. a. Which plant(s) sells permits, and how many do they each sell? Explain. b. Which plant(s) buys permits, and how many do they each buy? Explain. C. How much pollution is eliminated by this policy? d. Based on your answers, how much will it cost Simontown to achieve this reduction in pollution? e. How much would it cost to achieve this reduction in pollution if the plants could not trade the permits? Explain why making the permits tradeable reduces the cost of pollution reduction.

There are three industrial plants in Simontown: Plant A B C Current Pollution Level Cost of Reducing Pollution by One Pound 70 pounds 80 pounds 50 pounds $20 $25 $10 The government passes a cap-and-trade policy, giving each plant 40 tradeable permits, each permit allows for one pound of pollution emissions. a. Which plant(s) sells permits, and how many do they each sell? Explain. b. Which plant(s) buys permits, and how many do they each buy? Explain. C. How much pollution is eliminated by this policy? d. Based on your answers, how much will it cost Simontown to achieve this reduction in pollution? e. How much would it cost to achieve this reduction in pollution if the plants could not trade the permits? Explain why making the permits tradeable reduces the cost of pollution reduction.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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