Exhibit 30-3 Costs of Eliminating:Firm A Firm B Firm C 1st ton of pollution$ 30 $ 50 $ 600 2nd ton of pollution$ 70 $ 90 $ 700 3rd ton of pollution$125 $150 $ 900 4th ton of pollution$200 $250 $1,300 Refer to Exhibit 30-3. Suppose that Firms A, B, and C are the only polluters in the state and that each emits 4 tons of pollution into the atmosphere. To cut the level of pollution the government imposes an emission tax of $300 per ton of pollution. As a result of this tax, Firm A would _________________, firm B would ____________________ and firm C would __________________.
A. not reduce any of its pollution; not reduce any of its pollution; reduce all 4 tons of its pollution
B. reduce all 4 tons of its pollution; only reduce 1 ton of its pollution; not reduce any of its pollution
C. reduce all 4 tons of its pollution; reduce all 4 tons of its pollution; not reduce any of its pollution
D. not reduce any of its pollution; reduce 3 tons of its pollution; reduce all 4 tons of its pollution
Answer: C
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