Firm A and Firm B emit 300 tons of pollution each and each have marketable permits that allow each to emit 100 tons of pollution
If it costs $5,000 for Firm A to eliminate 100 tons of pollution and it costs Firm B $6,000 to eliminate 100 tons of pollution, then A) Firm B sells its permits to Firm A for a price above $6,000.
B) Firm A sells its permits to Firm B for a price below $6,000.
C) Firm A sells its permits to Firm B for a price above $6,000.
D) Firm B sells its permits to Firm A for a price below $6,000.
E) Neither Firm A nor Firm B sells permits because neither has extra permits.
B
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You put money into an account and earn a real interest rate of 6 percent. Inflation is 3 percent, and your marginal tax rate is 20 percent. What is your after-tax real rate of interest?
a. 4.8 percent b. 5.4 percent c. 7.2 percent d. 4.2 percent.