Why choose B? Why choose B? Table T0-6 The following table shows the total costs

Question

Why choose B? Why choose B? Table T0-6 The following table shows the total costs for each of four firms (A, B, C, and D) to eliminate units of pollution from their production processes. For example, for Firm A to eliminate one unit of pollution, it would cost $46, and for Firm A to eliminate two units of pollution, it would cost a total of S103 Firm Unit to be eliminated One unit Two units Three units Four units 46 103 180 282 45 100 173 263 42 98 169 264 49 108 183 280 Refer to Table 10-6. Suppose the government wanted to reduce pollution from 16 units to exactly 8 units. Which of the following fees per unit of pollution would achieve that goal? a. $58 b. $65 C. $78 d. $95

Explanation / Answer

5. B $65

Because firm's eliminate pollution units up to the fees where the marginal cost to eliminate last pollution unit is less than pollution fee per unit of pollution by government.

For all the firms the cost of elimination of third pollution unit is greater than $65, so they will emit only 2 units of pollution each and the target of 8 units of pollution will be achieved.

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.