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Consider two car factories, one run by Ford and the other run by Honda, that each create 100 tons of pollution. The government wants to
Consider two car factories, one run by Ford and the other run by Honda, that each create 100 tons of pollution. The government wants to reduce how much these two factories pollute so they now only allow factories to pollute if they have a permit. Each factory is given 50 pollution permits. A business can use a permit to emit one ton of pollution. To lower pollution it costs Ford $200 per ton of pollutant removed and it costs Honda $100 per ton removed. If the government does NOT allow the businesses to trade these permits, the total cost of reducing pollution will be A. 5,000 B 10,000 C. 15,000
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