Table 10-6
The following table shows the total costs for each of four firms (A, B, C, and D) to eliminate units of pollution from their production processes. For example, for Firm A to eliminate one unit of pollution, it would cost $46, and for Firm A to eliminate two units of pollution, it would cost a total of $103.
-Refer to Table 10-6. If the government charged a fee of $93 per unit of pollution, how many units of pollution would the firms eliminate altogether?
A)10
B)12
C)14
D)16

Question

Table 10-6
The following table shows the total costs for each of four firms (A, B, C, and D) to eliminate units of pollution from their production processes. For example, for Firm A to eliminate one unit of pollution, it would cost $46, and for Firm A to eliminate two units of pollution, it would cost a total of $103. 
-Refer to Table 10-6. If the government charged a fee of $93 per unit of pollution, how many units of pollution would the firms eliminate altogether?
A)10 
B)12 
C)14 
D)16

Quizplus · Accepted Answer

To determine how many units of pollution the firms would eliminate altogether, we need to find the point at which the total cost of elimination for each firm is exactly equal to the fee charged by the government. This can be found by adding up the marginal costs of each firm until the sum equals $93.

We start with Firm A, which has a marginal cost of $46 for the first unit and $57 for the second unit, for a total cost of $103. We then move on to Firm B, which has a marginal cost of $48 for the first unit and $58 for the second unit, for a total cost of $106. Adding these together gives us a total cost of $209 for two units of pollution eliminated.

Next, we add Firm C's marginal costs, which are $53 for the first unit and $63 for the second unit. This brings our total cost up to $325 for three units of pollution eliminated. Finally, we add Firm D's marginal costs, which are $61 for the first unit and $72 for the second unit. This gives us a total cost of $458 for four units of pollution eliminated.

At this point, we have a total cost that is greater than the fee charged by the government, so we need to go back and eliminate one more unit of pollution to bring the total cost down to $372 ($93 x 4). This means we need to eliminate a total of 14 units of pollution, which can be achieved by eliminating one more unit each from Firms A, B, and C and two more units from Firm D. Therefore, the answer is C.

Table 10-6 the Following Table Shows the Total Costs for Each of Each