For the next 4 questions, use the following scenario: The fi…
For the next 4 questions, use the following scenario: The first table presents a polluting firm’s private benefit/cost functions and social benefit/cost functions. The second table presents four scenarios of the tradeable pollution permits market. Production Quantity MSB=MPB MPC MSC 1 $60 $15 $45 2 55 25 55 3 50 35 65 4 45 45 75 5 40 55 85 6 35 65 95 7 30 75 105 Tradable Pollution Permit Scenarios Firm’s endowment of Permits Market Price per Permit Scenario A 1 permit $40 Scenario B 2 permits $30 Scenario C 3 permits $20 Scenario D 4 permits $10