Question

Four firms called Elm, Maple, Oak, and Cherry, produce wooden chairs. However, they also produce a great 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
Cost of reducing garbage by third five tons	\(7,000	\)9,000	\(8,100	\)6,000
Cost of reducing garbage by fifth five tons	\(0	\)9,900	\(8,400	\)7,000

Short answer

The enforced environmental policy is directed by command-and-control policy. It depicts a certain form of regulation.

Step-by-step solution

Command—and—control policy :  

The enforced environmental policy is directed by command-and-control policy. It depicts a certain form of regulation.

Explanation : 

The company has to cut its rubbish output in half.

1. Elm must save $\$5,500$by reducing his weight by five tons.

2. Maple must be reduced by $10$tons at a cost of $\$13,500$.

3. Oak will save $\$22,500$by reducing $15$tons.

4. Cherry must cut rubbish production by $20$tons, which will cost $\$18,000$.

A total of $\$59,500$will be spent. If the applicable technique is marketable permits, which can exist with permits that can minimize rubbish by a fourth, then we must reduce pollution by a significant amount overall.

Effect : 

As a result, pollution would follow where it is less expensive.

In this case, the total reduction pattern would take into account:

1. Elm, which must lower rubbish by $20$tons in addition to the $15$tons that can be sold.

2. Maple must be reduced by $5$tons, plus $5$tons must be purchased through the permission.

3. Oak that cannot be reduced through rubbish should be considered purchasing for the $15$tons of permits.

4. Cherry has to be reduced by $25$tons, leaving $5$tons that can be sold.

Finally, the overall cost would be reduced by $\$56,300$, down from $\$59,500$.