Show your work and explain your answer. Assume the four firms listed in the tabl

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Show your work and explain your answer.

Assume the four firms listed in the table below are the only polluters in the city of Collierville The government decides these three firms need to reduce their emissions by a total of 18 tons per week. Important: Please enter numbers, rounded to two decimals (e.g. 10.98, 350.01), without any symbols (do not enter $) or commas for all of the numerical questions in this assignment. ToyotaH Honda Ford MarginalMargin Marginal Cost of pollution pollution pollution reduction reduction reduction Reduced (tons Cost of Cost of per week) 50 50 50 1 $1,000 2 $2,000 $2,400 3 $3,000 $1,200 5200 5400 $3,600 5600 4 $4,000 5 $5,000 6 $6,000 7 $7,000 8 $8,000 $4,800 5800 $6,000 7,200 $2,000 $8,400 $1,000 $3,000 9,600 $4,000 9 9,000 10,800 S5 S5,000 10 $10,000 $12,000 6 $6,000 Question 3 of 6 1.0 Points 0 Accepted characters What size tax would cause the three firms to reduce a total of 15 tons per week? $

Explanation / Answer

Ans

Any tax above 6000.This is because higher cost polluters will benefit by producing pollution and buying pollution permits from low cost producers who will gain in the process. E. G both toyata and Honda can gain by producing goods and paying amount of 6000 per permit to Ford because they can reduce tax payments in the process. Ford will gain by earning more per permit than cost incurred while producing output.

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