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 the government imposes an emission tax of $300 per ton of pollution.  As a result of this tax, Firm A would _________________, firm B would ____________________ and firm C would __________________.

A) not reduce any of its pollution; not reduce any of its pollution; reduce all 4 tons of its pollution
B) reduce all 4 tons of its pollution; only reduce 1 ton of its pollution; not reduce any of its pollution
C) reduce all 4 tons of its pollution; reduce all 4 tons of its pollution; not reduce any of its pollution
D) not reduce any of its pollution; reduce 3 tons of its pollution; reduce all 4 tons of its pollution