deal of garbage (a mixture of glue, varnish, sandpaper, and wood scraps). The first row of Table 12.6 shows

the total amount of garbage (in tons) that each firm currently produces. The other rows of the table show

the cost of reducing garbage produced by the first five tons, the second five tons, and so on. First, calculate

the cost of requiring each firm to reduce the weight of its garbage by one-fourth. Now, imagine that the

government issues marketable permits for the current level of garbage, but the permits will shrink the

weight of allowable garbage for each firm by one-fourth. What will be the result of this alternative

approach to reducing pollution?

Elm

Maple

Oak

Cherry

Current production of garbage (in tons)

20

40

60

80

Cost of reducing garbage by first five tons

$5,500 $6,300 $7,200 $3,000

Cost of reducing garbage by second five tons $6,000 $7,200 $7,500 $4,000

Cost of reducing garbage by third five tons

$6,500 $8,100 $7,800 $5,000
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