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Cost of eliminating a ton of pollution for municipal energy

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Reference no: EM131268454

Suppose two utilities, People's Electric and Municipal Energy, each produce 100 tons of pollution per year. The government has a goal of eliminating half the pollution, and in turn, provides 50 pollution 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 $500 and the cost of eliminating a ton of pollution for Municipal Energy is $450. What is the total cost of each utility eliminating 50 tons of pollution?

Reference no: EM131268454

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