The following table describes the TOTAL profits from polluting: Firm 0 units pol
ID: 466095 • Letter: T
Question
The following table describes the TOTAL profits from polluting:
Firm
0 units pollution
1 unit pollution
2 units pollution
3 units pollution
4 units pollution
A
0
100
150
175
180
B
0
80
140
180
200
C
0
60
105
135
150
a) The government decides to sell SIX pollution permits. What do you expect the price to be for the 6th permit?
b) The government gives firms A and B 3 permits each (but none to Firm C). What will they do with their permits?
Firm
0 units pollution
1 unit pollution
2 units pollution
3 units pollution
4 units pollution
A
0
100
150
175
180
B
0
80
140
180
200
C
0
60
105
135
150
Explanation / Answer
I expect the profits to decrease for the sixth permit. There is a decrease in the increasing value. I expect the price to be more or less the same as in the 4th Unit pollution. The will be no suprise even if it gets lower.
The by not giving the permits to Firm C, will try and search whether any new entrant is available in the market, to whom this permit could be given. They will try and see further option, where an effective business deal could be closed in a profit making nature.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.