There are three factories in a town, all of which ermit 5 tons of pollution. They could reduce their emission but with a cost. The table bellow show the marginal abatement cost for each ton by which the firm could reduce its emmision. Suppose that the government wants to reduce total emissions from15 tons to 6 tons.

a) suppose the government orders each firm to reduce its polution by 3 tons, What is the total abatement cost?

b) suppose instead that the government issues 2 pollution permits to each firm. Denote this as the pollution program. Who will buy permits and who will sell them?

c) what is the range of equilibrium prices for the permits under the pollution program?

tons of reductions	marginal cost to
1st 2rd 3th 4th 5th	firm a	firm b	firm c
100	200	600
300	300	700
500	400	800
700	500	900
900	600	1000