Regulation versus tradablepermits reduce the combined pollution introduced by three local companie each firm creates 4 units of pollution in s. The governme reduce total pollution in the area to 6 units by sing between the following two Methods to Reduce Pollution . The government imposes pollution standards using reg The government issues tradable pollution permit The costs faced by each firm are different, ome firms to reduce pollut . The following : faced by each firm to eliminate each prohibitively expensive for all three firms. Cost of Eliminating the... First Unit of Pollution Second Unit of Pollution Third Unit of Pollution Firm Dollars (Dollars) (Dollars) Firm A 165 Firm B 600 1,200 Firm C 140 Next, suppose that two govern ed alternative plans that would reduce pollution by 6 units. Method 1: Regulation The first government employee suggests reducing pollution through regulation, To meet the pollution hires each firm to reduce its pollution by 2 units.Complete the following table with the total cost to each firm of reducing it's pollution by 2 wits. Total Cost of Eliminating Two Units of Pollution Firm (Dollars) Firm A Firm B Firm C Method 2: Tradable Permits Meanwhile, the other employee proposes using a different strategy to achieve the government's goal of reducing pollution in the area from 12 units to 6 units. This employee suggests that the government issue two pollution permits to each firm. For each permit a firm has in its possession, it can exult 1 unit of pollution. Firme are free to trade pollution permits with one another (that is, buy and sell them) as long as both firms can agree on a price For example, if firm A agrees to sell a permit to firm B at an agreed-upon price, then firm B would end up with three permits and would need to reduce its pollution by only 1 unit while firm A would end up with only one permit and would have to reduce its pollution by 3 units. Assume the negotiation and exchange of permits are costless. Because firm B has high pollution-reduction costs, it thinks it might be better off buying a permit from firm C and a permit from firm A so that it Joesn't have to reduce its own pollution emissions. At which of the following prices is firm C willing to sell one of its permits to firm B, but firm A is not? Check all that apply. 0 $109 0 $142 O $ 186 D $238 $443 Suppose the the government has set the trading price of a permit at $355 per permit. Complete the following table with the action each firm will take at this permit price, the amount of pollution each firm will eliminate, and the amount it costs each firm to reduce pollution to the necessary level. If a firm is willing to buy two permits, assume that it buys one pernat from each of the other fimis. (Hint: Do not include the prices paid for permits in the cost of reducing pollution.) Initial Pollution Permit Final Amount of Pollution Cost of Pollution Allocation Eliminated Reduction Firm (Units of pollution) Action ( Units of pollution) (Dollars) Firm A 2 Firm B Firm C Regulation Versus Tradable Permits Determine the total cost of eliminating six units of pollution using both methods, and enter the amounts in the following table. (Hint: You might need to get information from previous tasks to complete this table) Total Cost of Eliminating Six Units of Pollution Proposed Method (Dollars) Regulation Tradable Permits In this case, you can conclude that eliminating pollution is _ costly to society when the government regulates each firm to eliminate a certain amount of pollution than when it allocates pollution permits that can be bought and sold