Problem: 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
|
Required:
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?