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8. By how many pounds will the firm choose to reduce its pollution?

9. If Firm A reduces its pollutants from 700 units to 570 units, how many permits does it sell after one year?

- 3 days 3/ Question 8 In the graph below, the solid purple line represents the marginal cost of reducing particle emissions
Marginal Cost 4 8 12 16 20 24 Particle Emissions Reduction (pounds) Provide your answer below: particle emissions pounds)
- 3 days 3/50 Question 9 The government has recently introduced a marketable permit program for major polluters where one per
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Answer #1

8. Firm will reduce pollution till the point where the MC curve cuts the pollution charge line. This takes place at Q = 18 units

Thus, new pollution to be emitted = 18 units

Thus, Emissions must be reduced by 20-18 = 2 units

9.

Permits issued = 700(1-10%) = 630

Permits needed = 570

Thus, permits sold which are unused = 630-570 = 60 permits

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