Questbon 9 of 25 er headne reads Obama Urves up Miks per Ga

Questbon 9 of 25 ??? er headne reads Obama Urves up Miks per Gallon Requrements and the newspaper source s quoted as Emissions trom all ne vehicles must be cut rom 354 grams to 250 grams. Ic mcct this nm standard the pnce ot a new veh le w l nse b4?1.300 source us odai May 20 Accorcing to this information tre opportunity cost of reducing the emissionlevel by 1gram ? A. SO, 10 of other goods. B. 5008 of othar gcod C. 12.50 fher good3 D. $1,300 of other goods

Solution

Authority has decided to reduce emission level by increasing the price of new vehicles by $1300.

Total reduction in emission = 354 - 250 = 104 gm

Cost of reducing 104 gm emission = $ 1300

Opportunity cost of 1 gm emission = $1300/104

= $ 12.5 of other good.