Answer to Question #86388 in Microeconomics for Sarah Mutinda

Question

Being a student of Professor Hayes’ Econ course, you suggest that using tradeable permits can achieve the same goal at a lower cost. How many permits should be issued to each firm to reduce pollution by 60 tons?

Answer 1

As 210 tons are produced in total, then 210 - 60 = 150 permits should be issued to each firm to reduce pollution by 60 tons.