Refer to the Figure above. Assume that the firm is facing MAC₁ and that it has adjusted its permit holdings to e₁. What is the firm's permit purchase costs? A) (e+d+b) B) (c+d+e) C) (e+d) D) (e)

Question

Quizplus · Accepted Answer

The firm's permit purchase costs include the costs of all permits it needs to buy to cover its emissions. This includes the initial emissions level (e) plus any additional emissions it decides to make beyond its initial allocation, which are represented by the areas (c+d). Thus, the total cost is the sum of these areas: (c+d+e).

Refer to the Figure Above