The Diagram Below Shows the Marginal Cost of Pollution Abatement

question 89

Multiple Choice

The diagram below shows the marginal cost of pollution abatement for two firms,Firm X and Firm Y.
FIGURE 17-6
-Refer to Figure 17-6.There is an emissions tax of $ t per unit of pollution.The resulting amount of pollution abatement is socially optimal if

• A)Firm X abates QX and Firm Y abates QY.
• B)each firm abates at QR.
• C)the emissions tax causes no change in firmsʹ polluting activity.
• D)the emissions tax is equal to the marginal social cost of pollution.
• E)each firm pays the maximum amount of tax.

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Definitions:

Driving Violation

An act of breaking or disregarding the laws that regulate vehicle operation on public roads, potentially leading to penalties such as fines, points on a license, or other legal consequences.

Social Insurance

A system where government or a public agency provides financial support to individuals to cover specific risks such as unemployment, aging, or disability.

Government Spends

The total financial expenditures of a government on public services, infrastructure, defense, welfare, and administration.

Insurable Interest

A party who has an interest in property or life.