Two firms, A and B, each currently emit 100 tons of chemicals into the air. The government has decided to reduce the pollution and from now on will require a pollution permit for each ton of pollution emitted into the air. The government gives each firm 40 pollution permits, which it can either use or sell to the other firm. It costs Firm A $200 for each ton of pollution that it eliminates before it is emitted into the air, and it costs Firm B $100 for each ton of pollution that it eliminates before it is emitted into the air. After the two firms buy or sell pollution permits from each other, we would expect that Firm A will emitGroup of answer choices20 fewer tons of pollution into the air, and Firm B will emit 100 fewer tons of pollution into the air.100 fewer tons of pollution into the air, and Firm B will emit 20 fewer tons of pollution into the air.20 more tons of pollution into the air, and Firm B will emit 100 fewer tons of pollution into the air.50 fewer tons of pollution into the air, and Firm B will emit 50 fewer tons of pollution into the air.

Q9 There are three industrial firms in Happy Valley.The government wants to reduce pollution to 60 units, so it gives each firm 20 tradable pollution permits. Firm: A, B, C Initial pollution level: 30,40,20 Cost of reducing pollution by one unit: 20, 30, 10 Q10 a) Who sells permits and how many do they sell? Who buys permits and how many do they buy? Briefly explain why the sellers and buyers are each willing to do so. What is the total cost of pollution reduction in this situation? b) How much higher would the costs of pollution reduction be if the permits could not be traded?

Which of the following require firms to pay to pollute?(i)corrective taxes(ii)tradable pollution permits(iii)pollution regulations aboth (ii) and (iii) bboth (i) and (ii) c(iii) only d(i) only

Imposing taxes that increase as a firm's pollution increases is often recommended by economists as a means to reduce pollution. The reason for this recommendation is that such taxes would likely aeliminate pollution completely bencourage firms to use the most efficient method to reduce pollution cbe paid out of firm's profits and not paid for by higher consumer prices dencourage firms to increase production

If the allowances can be traded and the market price of allowances is $50 per ton, whichpolluter will buy allowances, and which one will reduce emissions and sell allowances tothe other? How much will be the total abatement cost?

When there is uncertainty over the marginal cost of pollution abatement, explain when a tax on pollution is preferable to quantity regulation