Exhibit 17.7 -Refer to Exhibit 17.7,which Shows the Optimal Allocation of Pollution

Multiple Choice

Exhibit 17.7

-Refer to Exhibit 17.7,which shows the optimal allocation of pollution rights to firms polluting a river.If the government sells the right to pollute the river,_____

A) firms will emit Q₁ units of the pollutant at a price of P₀ each.
B) firms will emit Q₂ units of the pollutant at a price of P₀ each.
C) firms will emit Q₀ units of the pollutant at a price of P₃ each.
D) firms will emit Q₁ units of the pollutant at a price of P₁ each.
E) firms will emit Q₂ units of the pollutant at a price of P₃ each.