There are three industrial firms in Happy Valley. Firm Initial Pollution Level Cost of Reducing Pollution by 1 Unit (Units) (Dollars) A 30 5 B 45 10 C 60 20 The government wants to reduce pollution by 90 units, so it gives each firm 30 tradable pollution permits. Because firm has the highest cost of reducing pollution by 1 unit, it would like to another firm. Because firm has the lowest cost of reducing pollution by 1 unit, it is willing to the firm with the highest cost.

There are three industrial firms in Happy Valley. Firm Initial Pollution Level Cost of Reducing Pollution by 1 Unit (Units) (Dollars) A 30 5 B 45 10 C 60 20 The government wants to reduce pollution by 90 units, so it gives each firm 30 tradable pollution permits. Because firm has the highest cost of reducing pollution by 1 unit, it would like to another firm. Because firm has the lowest cost of reducing pollution by 1 unit, it is willing to the firm with the highest cost.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter16: Government Regulation

Section: Chapter Questions

Problem 9E

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Firm	Initial Pollution Level	Cost of Reducing Pollution by 1 Unit
A	30	5
B	45	10
C	60	20

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