Consider a coal-fired electric-power plant that is operating under a system of tradable pollution permits (and the firm currently owns permits). If its marginal cost of pollution abatement is $100 per unit and the price of the permit is $150 per unit: this firm will A) sell permits and abate more pollution. O B) buy more permits and abate less pollution. C) not buy any permits, since that would push up its costs. D) buy more permits and abate more pollution. E) not abate at all.

Consider a coal-fired electric-power plant that is operating under a system of tradable pollution permits (and the firm currently owns permits). If its marginal cost of pollution abatement is $100 per unit and the price of the permit is $150 per unit: this firm will A) sell permits and abate more pollution. O B) buy more permits and abate less pollution. C) not buy any permits, since that would push up its costs. D) buy more permits and abate more pollution. E) not abate at all.

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter17: Externalities And The Environment

Section: Chapter Questions

Problem 5QFR

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