Question

Exhibit 31-3 Costs of Eliminating: Firm A Firm B Firm C 1st unit of pollution $ 20 $ 50 $ 500 2nd unit of pollution $ 60 $100 $ 700 3rd unit of pollution $120 $180 $1,000 4th unit of pollution $200 $350 $1,500 5th unit of pollution $300 $500 $2,500 6th unit of pollution $400 $600 $4,000 Refer to Exhibit 31-3. What is the cost to Firm A of eliminating 4 units of pollution

Answer 1

$380

Step-by-step explanation:

Firm A Firm B Firm C

1st unit of pollution $20 $50 $500

2nd unit of pollution $60 $100 $700

3rd unit of pollution $120 $180 $1,000

4th unit of pollution $200 $350 $1,500

5th unit of pollution $300 $500 $2,500

6th unit of pollution $400 $600 $4,000

Firm A's cost of eliminating four units of production = the sum of the costs of eliminating the four units = $20 (for the first unit) + $60 (for the second unit) + $120 (for the third unit) + $200 (for the fourth unit) = $380

This table does not show cumulative costs, instead it shows the marginal costs of eliminating an extra unit of pollution.