Exhibit 30-3 Refer to Exhibit 30-3

Multiple Choice

Exhibit 30-3 Refer to Exhibit 30-3. Suppose that Firms A, B, and C are the only polluters in the state and that each emits 4 tons of pollution into the atmosphere. To cut the level of pollution in half the government issues two transferable pollution permits to each firm.  What is the total cost to society of decreasing pollution to half its present level if firm C buys one pollution permit from firm A and one pollution permit from firm B?

A) $515
B) $1,300
C) $1,380
D) $965
E) $10,350