suppose the government wants to reduce the total pollution emitted by three firms. currently, each firm is creating 4 tons of pollution, for a total of 12 tons. the government is considering the following two methods to reduce total pollution to 6 tons: 1. The government sets regulation specifying that each of the three firms must cut its pollution in half. 2. The government allocates two tradable pollution permits to each of the three firms. Each permit allows the firm to emit 1 ton of pollution. Assume the negotiation and exchange of permits are costless. The following table shows the cost each firm faces to eliminate each unit of pollution. Firm X $250 $350 Firmy Firm Z $600 $1,200 $700 $2,400 Cost of Eliminating: First ton of pollution Second ton of pollution Third ton of pollution Fourth ton of pollution $450 $550 $800 $900 $3,600 $5,000 Suppose the owners of the three firms get together and agree on a trading price of $750 per permit. Suppose the owners of the three firms get together and agree on a trading price of $750 per permit. Complete the following table with the action each firm will take at this permit price and the amount of pollution each firm will eliminate Initial Pollution Permit Allocation (Tons of pollution) Final Amount of Pollution Eliminated (Tons of pollution) Action Firm Firm X Firm NNN Firm Z Determine the total cost of eliminating 6 tons of pollution under each method, and enter the amounts in the following table. Total Cost of Eliminating 6 Tons of Pollution (Dollars) Method Regulation Tradable pollution permits In this case, using tradable pollution permits reduces 6 tons of pollution at using regulation. Grade It Now Save & Continue Continue without saving