Answer to Question #59622 in Microeconomics for ali

Question

Transferable Pollution Credits. Each firm gets two transferable pollution credits. What are the clean-up costs?
A: 1 10 18 20 22
B: 2 3 5 7 9
C: 4 6 8 28 30

Answer 1

If each firm gets two transferable pollution credits, then firm A will buy 1 credit from both firms B and C, because its clean-up costs are higher than the same costs of firms B and C.