QUESTION 10 Chris owns a large pharmaceutical company, which has several large production plants across the country. These plants produce approved drugs. In producing these drugs, a large amount of hazadous chemicals is released into the air. The Australian Government recently introduced legislation that charges companies based on the amount of chemicals emitted that are above 10% hazardous. They can either opt to meet the 10% target and pay no permit cost (Process D), or purchase permits entitling them to pollute in excess of 10% (but this will also incur a cost to modify their production methods). -_IE-I!- Hazardous chemicai emissions (%) Costs to modify Chris' production methods ($ thousand) _m Permiicosusiiiousand) -___ a. What is the system called where the government could issue a maximum amount of hazardous chemical emissions permits that would allow firms to emit hazardous chemicals only if they held a valid permit? . Type CT for Cap and Trade, F for Free market, C for Competitive market. b. There is a total of 7 pharmaceutical companies exactly like Chris's that make up the entire Australian pharmaceuticals industry (including Chris's company). What is the net cost to society for the Australian pharmaceuticals industry in order to meet the Government's 10% reduction target? Answer in millions of dollars (to one decimal place). $ million. c. If the cost of permits was 4 times that shown in the table, and firms chose to adopt the least cost solution to achieve any emission target. What process would be adopted by all those in the pharmaceuticals industry? . Type A, B, C, or D