The table shows a firm that has four possible methods of production to make its desired output. Each method has a different cost and causes a different amount of pollution.
The government rules that polluting firms must buy pollution permits that cost $90 each. Each permit allows the firm to emit 1 tonne of pollution. No pollution can be emitted without a permit.
Which method of production has least total cost?

cost of production
($ per day)
pollution caused
(tonnes per day)
A 320 3
B 380 2
C 480 1
D 700 0

Q: What topic does this question test?

This question tests Market Failure and Government Intervention in A-Level Economics (syllabus code 9708). It is worth 1 mark.

Q: Which exam paper is this question from?

This question appeared in the Cambridge A-Level Economics May/June 2019 examination, Paper 3 Variant 1 (9708_s19_qp_31.pdf).

Question

The table shows a firm that has four possible methods of production to make its desired output. Each method has a different cost and causes a different amount of pollution.
The government rules that polluting firms must buy pollution permits that cost $90 each. Each permit allows the firm to emit 1 tonne of pollution. No pollution can be emitted without a permit.
Which method of production has least total cost?

cost of production
($ per day)
pollution caused
(tonnes per day)
A 320 3
B 380 2
C 480 1
D 700 0

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