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The following questions use this scenario 3 Scenario 3A. There are three rms, AB; and C that produce electricity. The rst two rms have the

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The following questions use this scenario 3 Scenario 3A. There are three rms, AB; and C that produce electricity. The rst two rms have the same permegawatt cost of production equal to $2. while rm (3 has a permegawatt cost of $1. The rms differ, however: in their pollution. Firms A: B, and C produce respectively 1: 21 and 3 cubic feet of carbon monoxide per megawatt produced. A cubic foot of carbon monoxide pollutes the environment: and has a social cost of $2.5. The demand for electricity is represented by the inverse demand function P {lvlw} =1UU Mw, where lvlvv represents the megawatts consumed by the public. Suppose rms are not held accountable for the pollution they produce. Scenario SB. Suppose now that the government can measure the amount of pollution issued by each rm, and suppose that the government constrains each rm to emit no more than El cubic feet of carbon monoxide. Scenario SC Suppose that government allows rms to trade their permits to emit carbon monoxide. Your answers are numbers only, do NOT include symbols

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