Suppose a municipality votes to reduce the combined pollution introduced by three local companies. Presently, each firm creates 4 units of pollution in the area, for a total of 12 pollution units. The government can reduce total pollution in the area to 6 units by choosing between the following two methods: Methods to Reduce Pollution 1. The government imposes pollution standards using regulation. 2. The government issues tradable pollution permits. The costs faced by each firm are different, so it is more difficult for some firms to reduce pollution than others. The following table shows the cost faced by each firm to eliminate each unit of pollution. Assume that the cost of eliminating all 4 units of pollution (that is, reducing pollution to zero) is A+ prohibitively expensive for all three firms.ALEKS - ONLLINE Q... ^ C4ELink: Log in to t. All B NGAGE |MINDTAP Q Search this course work (Ch 10) O X Cost of Eliminating the... First Unit of Pollution Second Unit of Pollution Third Unit of Pollution Firm (Dollars) ( Dollars) (Dollars) Firm A 90 125 180 Firm B 55 70 110 Firm C 650 300 1,500 Next, suppose that two government officials proposed 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 goal, the government requires each firm to bongo reduce its pollution by 2 units. Complete the following table with the total cost to each firm of reducing its pollution by 2 units. At Total Cost of Eliminating Two Units of Pollution Firm (Dollars)ng.cengage.com/staticb/ui/evo/index.html?deploymentld=56736619720212108401873280819&elSBN=9781337096577&snapshotld=3804460&id=199009896.. * as W_ A ALEKS- Nicholas W. ALEKS - ONLLINE Q. ( C4ELink: Log in to t. G CENGAGE | MINDTAP Q Search this cour Homework (Ch 10) Complete the following table with the total cost to each firm of reducing its pollution by 2 units. LE Total Cost of Eliminating Two Units of Pollution Firm (Dollars) Firm A RS Firm B Firm C TALS Method 2: Tradable Permits JRSES V 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 emit 1 unit of pollution. Firms 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 udy tools 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. ollege Success Tips Because firm C has high pollution-reduction costs, it thinks it might be better off buying a permit from firm B and a permit from firm A so that it Career Success Tips doesn't have to reduce its own pollution emissions. At which of the following prices is firm B willing to sell one of its permits to firm C, but firm A is not? Check all that apply. Help $99 1 Mar 28 5:44 8lid=3804460&id=199009896... Nicholas W.. A ALEKS - Nicholas W.. ALEKS - ONLLINE Q. C4ELink: Log in to t. olas CENGAGE | MINDTAP Q Search t Homework (Ch 10) ME Because firm C has high pollution-reduction costs, it thinks it might be better off buying a permit from firm B and a permit from firm A so that it ROFILE doesn't have to reduce its own pollution emissions. At which of the following prices is firm B willing to sell one of its permits to firm C, but firm A is not? Check all that apply. ORDERS $99 $160 RENTALS $163 COURSES v $692 $707 Study tools Suppose the the government has set the trading price of a permit at $630 per permit. College Success Tips Career Success Tips 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 permit from each of the ? Help other firms. (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 Daduction Mar 28 5:4499009896... *7 EKS - Nicholas W.. A ALEKS - Nicholas W. ALEKS - ONLINE Q. C4ELink: Log in to t. All Bookmarks nicholas CENGAGE | MINDTAP Q Search this course ? Homework (Ch 10) O X HOME 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 permit from each of the PROFILE other firms. (Hint: Do not include the prices paid for permits in the cost of reducing pollution.) ORDERS Initial Pollution Permit Final Amount of Pollution Cost of Pollution A-Z Allocation Eliminated Reduction Firm (Units of pollution) Action (Units of pollution) (Dollars) RENTALS Firm A N Firm B N EI COURSES v Buy one permit Firm C N Buy two permits Regulation Versus Tradable Permits Don't buy/sell Study tools Sell one permit Sell two permits M College Success Tips 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.) Career Success Tips Total Cost of Eliminating Six Units of Pollution Proposed Method (Dollars) At ? Help Regulation Tradable Permits 1 Mar 28 5:44 9 94omework (Ch 10) Firm B 2 v I Firm C 2 v ': 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) k Regulation | | Tradable Permits | w costly to society when the government distributes tradable permits than when it ng In this case, you can conclude that eliminating poliution is regulates each firm to eliminate a certain amount of pollution. Continue without 33 @ Mar2s (,f%mu