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3 years ago

Once tradable pollution permits have been allocated to firms:

Business

1 answer:

Crazy boy [7]3 years ago

4 0

Answer: D.

firms that can reduce pollution only at high cost will be willing to pay the most for the pollution permits.

Explanation: Tradable pollution permits are so-called cap and trade schemes. They give companies a legal right to pollute a certain amount per fixed time span. Firms that pollute less can then sell their leftover pollution permits to firms that pollute more. Credits are traded within defined trading areas.

Pollution permits, e.g. carbon trading schemes where firms are given the right to pollute a certain amount; these permits can be traded with other firms. Regulation. Limits on a number of pollutants that can be discarded into the atmosphere.

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Answer:

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b. Contribution Margin Income Statement, assuming that Zachary invests in the new production equipment:

Sales Revenue $476,000

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Contribution $367,200

Fixed costs ($276,600 + 9,700) 286,300

Net income $80,900

Explanation:

a) Data and Calculations:

Annual production and sales = 6,800 units

Variable cost per unit = $18

Total variable cost = $122,400 ($18 * 6,800)

Fixed costs = $276,600

Total cost = $399,000 ($122,400 + $276,600)

Annual profit earned = $77,000

Therefore, sales revenue = $476,000 ($399,000 + $77,000)

Selling price per unit = $70 ($476,000/6,800)

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