Say we have two types of production firms: A and B. There are 10 type A firms an

Question

Say we have two types of production firms: A and B. There are 10 type A firms and 10 type B firms. Type A firms each emit 5 units of pollution with every good they produce. It costs them $3 to clean up each unit of pollution. Type B firms each emit 8 units of pollution with every good they produce. It costs them $5 to clean up each unit of pollution. Now assume the government forces each and every firm to cut emissions by 20%. What is the total cost to all firms to cut emissions by 20%? (record your answer in this form: " x.xx ")

Explanation / Answer

Cost to firm A = $3*(0.2*5) = $3

Cost to firm B = $5*(0.2*8) = $8

Total cost to all firms = 10*$3 + 10*$8 = $110

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