If it costs Con Ed approximately $20 per additional ton of air pollution abated, but it costs PG&E only $10 per additional ton of air pollution abated and a marketable pollution permit trades for $14 per ton,
A)PG&E could gain by selling and Con Ed could gain by buying.
B)PG&E could gain by buying and Con Ed could gain by selling.
C)both PG&E and Con Ed could gain by buying.
D)both PG&E and Con Ed could gain by selling.

Question

Quizplus · Accepted Answer

Since it costs PG&E less to abate air pollution, they can sell their marketable pollution permit for $14 per ton and still make a profit. Con Ed, on the other hand, would benefit from buying the permit for $14 per ton instead of spending $20 per ton to abate the same amount of pollution. Therefore, both companies could gain from this transaction.

If It Costs Con Ed Approximately $20 Per Additional Ton