The Diagram Below Shows the Marginal Cost of Pollution Abatement

question 77

Multiple Choice

The diagram below shows the marginal cost of pollution abatement for two firms,Firm X and Firm Y.
FIGURE 17-4
-Refer to Figure 17-4.Suppose Firms X and Y are each abating QR units of pollution.If Firm X then reduces pollution by one unit and Firm Y increases pollution by one unit,then

• A)total pollution remains the same but the total cost of abatement falls.
• B)total pollution remains the same but the total cost of abatement increases.
• C)the total cost of abatement remains the same but pollution falls.
• D)the total cost of abatement remains the same but pollution increases.
• E)the total costs of abatement and the amount of pollution do not change.

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Definitions:

Semiannual Interest

Interest that is calculated and paid twice a year, typically used in the context of bonds and loans.

Market Rate

The prevailing price or interest rate at which goods, services, or securities are bought and sold in a competitive marketplace.

Straight-Line Method

A method of calculating depreciation or amortization by evenly spreading the cost of an asset over its useful life.

Callable Bonds

Obligations that give the issuer the option to redeem them ahead of their final maturity, at a set price.