Saved There are three major ferry lines operating on the East River, each genera

Question

Saved There are three major ferry lines operating on the East River, each generating 100 units of pollution per year. The ferry lines face the costs of reducing pollution that are shown in the table below Cost of reducing pollution Ferry line points $1,800 a. The government has decided it wants to reduce pollution levels by 50 percent and requires each ferry line to cut its pollution in halif Determine the cost of pollution reduction for each ferry line. Instructions: Round your answers to the nearest dollar Cost of pollution reduction Ferry line The total cost of pollution reduction is b. Suppose the government decides to give each ferry line 50 tradable permits Each permit allows a ferry line to produce one unit of pollution Ferry line [(Click to select), will buy L permits from ferry line Cinselec c. Under this system of tradable permits, the total cost of pollution reduction is

Explanation / Answer

Consider the given problem, here the “cost reduction pollution table” for each of the “Ferry line” is given in the problem.

So, if “Ferry A” will reduce pollution by “50unit” then the total cost be “1,500*50=75,000”.

Now, if “Ferry B” will reduce pollution by “50unit” then the total cost be “2,500*50=1,25,000”.

Finally, if “Ferry C” will reduce pollution by “50unit” then the total cost be “1,800*50=90,000”.

So, total Cost by all these Ferry is “75,000 + 1,25,000 + 90,000 = 2,90,000”.

Now, in the 2nd case, since the unit cost for “B” maximum and the unit cost for “A” is minimum, so if “B” will purchase 1 permit from “A” then the cost of “B” will able to reduce cost by, “25,00” on the other hand for “A” the cost will increase by “15,00”. So, since 2500 > 1500, => overall cost will reduced.

So, here “B” will buy all the 50 permits from “A”.

So, here Total Cost be, “1500*100 + 1800*50 = 1,50,000 + 90,000 = 2,40,000 < 2,90,000”.

So, the overall cost will be reduced.

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