Ch1-slides - Chapter One Analyzing Economic Problems...

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Analyzing Economic Problems Chapter One Chapter One
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Example: How to Reduce Global Warming Efficiently Example: How to Reduce Global Warming Efficiently The government try to reduce pollution, but it does not know how costly for each individual firm to reduce production. EU’s cap-and-trade system: Each firm receives a quota or a cap. Firms are free to trade these permits in an open market. Lower cost firms will sell quotas and higher cost firms will buy quotas.
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