The following table describes the TOTAL cost from polluting:

Firm

0 units pollution

1 unit pollution

2 units pollution

3 units pollution

4 units pollution

A

160

80

30

10

0

B

185

120

60

25

0

C

160

90

45

20

0

a) The government decides to sell SIX pollution permits. What do you expect the price to be for the 6thpermit?

b) The government gives firms A and B 3 permits each (but none to Firm C). What will they do with their permits?

Show all the work. Explain how price of the 6th permit is calculated. If there is a trade, what is the price range and between which firms?