Question
Two firms, A and B, each currently dump 50 tonnes of chemicals into the local river. From now on, both firms will require a pollution
Two firms, A and B, each currently dump 50 tonnes of chemicals into the local river. From now on, both firms will require a pollution permit for each tonne of pollutants dumped. The gov't gives each firm 20 tonnes worth of pollution permits, which it can either use or sell to the other firm. it costs firm A $100 for each tonne of pollutant that it eliminates before it reaches the river, and it costs firm B $50 for each tonne of pollutant that it eliminates before it reaches the river. after the 2 firms buy or sell pollution permits from each other, we would expect that
C. firm A will dump 10 fewer tonnes of pollutants into the river, and firm B will dump 50 fewer tonnes of pollutant into the river
Can someone please explain why the answer is C
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started