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Firm X Pays Firm Y $345 for a Pollution Permit

Question 1

Multiple Choice

Firm X pays firm Y $345 for a pollution permit. This expenditure on the part of firm X is considered a __________. Firm Y ends up spending $200 to eliminate some pollution. This expenditure on the part of firm Y is considered a __________.


A) resource cost; transfer
B) fixed cost; sunk cost
C) market environmental cost; standards cost
D) transfer; resource cost
E) none of the above

Correct Answer:

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