. (Problem 2b). Many dairy farmers in California are adopting a new technology t
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Question
. (Problem 2b). Many dairy farmers in California are adopting a new technology that allows them to produce their own electricity from methane gas captured from animal wastes. (One cow can produce up to 2 kilowatts a day.) This practice reduces the amount of methane gas released into the atmosphere. In addition to reducing their own utility bills, the farmers are allowed to sell any electricity they produce at favorable rates.Suppose some dairy farmers have lower costs of transforming methane into electricity than others. How does this system lead to an efficient allocation of emissions reduction among farmers? A. Farmers with lower costs will transform fewer units of methane gas into electricity than will farmers with higher costs. B. This system will not lead to an efficient allocation of emissions reduction among farmers. C. Farmers with lower costs will transform more units of methane gas into electricity than will farmers with higher costs. . (Problem 2b). Many dairy farmers in California are adopting a new technology that allows them to produce their own electricity from methane gas captured from animal wastes. (One cow can produce up to 2 kilowatts a day.) This practice reduces the amount of methane gas released into the atmosphere. In addition to reducing their own utility bills, the farmers are allowed to sell any electricity they produce at favorable rates.
Suppose some dairy farmers have lower costs of transforming methane into electricity than others. How does this system lead to an efficient allocation of emissions reduction among farmers? A. Farmers with lower costs will transform fewer units of methane gas into electricity than will farmers with higher costs. B. This system will not lead to an efficient allocation of emissions reduction among farmers. C. Farmers with lower costs will transform more units of methane gas into electricity than will farmers with higher costs.
Explanation / Answer
Ans is C
Farmers with lower cost will transform more units of methane gas into electricity to avoid bill because the bill would have been more than the cost and thus it is beneficial for firm to produce methane itself.
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