Two Firms, a and B, Are Legally Required to Reduce

question 15

Multiple Choice

Two firms, A and B, are legally required to reduce their toxic emissions. If Firm A's marginal cost of abatement is $5 and Firm B's marginal cost of abatement is $3,

• A) the socially optimal joint level of abatement is not being achieved.
• B) Firm B should abate more and Firm A should abate less in order to reduce total abatement costs.
• C) Firm A should abate more and Firm B should abate less in order to reduce total abatement costs.
• D) their joint total cost of abatement is at a minimum.
• E) their joint total cost of abatement is at a maximum.