Using Scenario 1, calculate the total cost of pollution when both steel companies are allowed to pollute only one million gallons of thermal water each and the right is not transferable or tradable
What will be an ideal response?
The first million gallons is essentially "free" to each steel company. Therefore the old steel mill will dump 1 million gallons but will pay 25 cents on cleaning up the remaining 4 million gallons for a total cost of $1 million. The modern steel plant will also dump 1 million gallons of thermal water and will pay 5 cents on the remainder of 4 million gallons for a total cost of $200,000 . The combined cost of getting rid of the 8 million gallons of thermal water is $1,200,000 .
You might also like to view...
Which of the following is TRUE?
A) Technological efficiency occurs if the maximum feasible amount of output is achieved from a given quantity of inputs. B) Technological efficiency depends on the relative cost of the resources used in production. C) If production is technologically efficient, then it must be economically efficient. D) All of the above answers are correct.
Which of the following groups believes that unemployment is only a temporary condition that disappears when unemployed workers, competing for jobs, drive down wage rates?
a. classical school b. Keynesian school c. neo-Keynesian school d. rational expectations school e. supply-side school