demand for sulfur dioxide by coal-fired electricity electricity producers is:
Firm A's demand: P= 1,000 - 80 Q
Firm b's demand: P= 1,000 - 20 Q
where Q is quantity of sulfur dioxide measured in thousands of tons, and P is price per ton of sulfur dioxide.
a)With the market cap of 50,000 permits total, how many permits will each firm end up with after all permits are traded? (only one price for permits)
b) Instead of the tradeable emissiions permit system, the firms are subject to the tax of $200. How much sulfur will each firm emit?
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