Suppose there are two firms that produce sulfur dioxide emissions, Firm A and Firm B. Each firm emits 30 tons of sulfur dioxide per year. The cost of reducing one ton of sulfur is $200 for Firm A and $250 for Firm B.
a. Firm A would be willing to reduce its emissions by 5 tons if Firm B paid it at least $___________.
b. If Firm B emits 60 tons of sulfur dioxide and Firm A emits zero tons, do social costs increase or decrease?