A manufacturing frm has a marketable permit that currently allows for 2000 tons of emissions.However,...
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A manufacturing frm has a marketable permit that currently allows for 2000 tons of emissions.However, the marketable permit is shrinkable and the frm will only be allowed 1,500 tons of emissions next year. If new permitting on the open market cost $100,000 for 500 tons of emissions new equipment to reduce emissions costs $75,000; and the cost of shutting down production is $100,000 in lost proft, plus shut down costs of 25,000, and a $500 fne for each pound of emissions over permitted levels, What should the frm do Buy a marketable permit llowing for 500 tons of emissions. Pay the fine Shut down production Instal new equipment
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