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Suppose that there are only two firms that pollute, A and B, and each emits 10 tons of waste into the air. Firm A can
Suppose that there are only two firms that pollute, A and B, and each emits 10 tons of waste into the air. Firm A can reduce its pollution at a cost of $100 per ton and Firm B can reduce its pollution at a cost of $500 per ton. Each has been given an emission credit allowing it to pollute 6 tons. If firms maximize profits, what will happen? Explain and show your work.
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