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Cost of eliminating a ton of pollution for municipal energy

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Suppose two utilities, People's Electric and Municipal Energy, each produce 500500tons of pollution per year. The government has a goal of eliminating half the pollution, and, in turn, provides 250pollution permits to each utility. A pollution permit is required to legally produce a ton of pollution. However, the two utilities are allowed to trade permits. Suppose the cost of eliminating one ton of pollution for People's Electric is $200and the cost of eliminating a ton of pollution for Municipal Energy is $50.

The total cost of each utility eliminating 250tons of pollution is

Reference no: EM131239808

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