The Diagram Below Shows the Marginal Costs of Pollution Abatement

question 81

Multiple Choice

The diagram below shows the marginal costs of pollution abatement for two firms,Firm 1 and Firm 2.
FIGURE 17-5
-Refer to Figure 17-5.Suppose each firm is currently abating pollution to the level Q3.Which of the following statements is true?

• A)This outcome is efficient because both firms are abating the same amount.
• B)This outcome is not allocatively efficient because the marginal benefits and marginal costs of abatement are not equated.
• C)This outcome is not allocatively efficient because less than 100% abatement is being achieved.
• D)This outcome is not productively efficient because one firm is abating more pollution than the other.
• E)This outcome is not productively efficient because the total cost of achieving this level of abatement is not minimized.

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Definitions:

Repeat Customers

Individuals or entities that make more than one purchase from a business, indicating customer loyalty and satisfaction.

Debt Retirement

The process of paying off debt before or at its maturity date, effectively removing it from the company's balance sheet.

Transitory Components

Elements of a company's financial records that are expected to be temporary and not indicative of ongoing operational performance.

Sustainable Cash Flows

Cash flows that are expected to continue at a certain level in the future without significantly depleting the resources generating them.