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Author Question: The above figure shows the marginal benefit from pollution for two firms. If each firm receives a ... (Read 350 times)

ghost!

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on: Jun 18, 2019


The above figure shows the marginal benefit from pollution for two firms. If each firm receives a marketable permit to produce 25 units of pollution, which one of the following is most likely to happen?
◦ Firm B will sell some pollution rights to firm A.
◦ Firm A will produce all 50 units of pollution.
◦ Firm A will sell some pollution rights to firm B.
◦ Both firms will produce 25 units of pollution.
Microeconomics ¦ Perloff ¦ 8th Edition
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dreamfighter72

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Reply #1 on: Jun 18, 2019
Firm B will sell some pollution rights to firm A.


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ghost!

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Reply #2 on: Jun 18, 2019
Thank you!


dreamfighter72

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Reply #3 on: Jun 18, 2019
Always glad to help...


pane00

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Reply #4 on: Jun 18, 2019


The above figure shows the marginal benefit from pollution for two firms. If both firms receive a marketable permit to pollute 25 units of pollution each, how much will each firm pollute and how much will a permit for one unit of pollution be worth?


trog

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Reply #5 on: Jun 18, 2019
Firm B will sell permits to firm A until the marginal benefits are the same for both firms. Firm A will generate 37 tons of pollution and firm B will generate 13 tons of pollution. The market value of a permit will be $5.


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