Suppose There Are Only Two Tire Manufacturers in an Area,and

question 25

Multiple Choice

Suppose there are only two tire manufacturers in an area,and they generate the same amount of carbon emission pollution per hour.The only difference is that firm 1 is a low-cost firm and firm 2 is a high-cost firm.What would we expect if the government were to use a uniform abatement policy?

• A) The demand for tires will increase.
• B) The quantity of tires produced will increase.
• C) The uniform abatement policy is likely to be inefficient.
• D) The uniform abatement policy is likely to be efficient.

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Definitions:

Pollution Abatement

Actions or measures implemented to reduce, control, or eliminate pollution from various sources.

Society's Perspective

The collective viewpoints, interests, and priorities of a community or population regarding various issues or policies.

Marginal Benefit

The extra utility or satisfaction garnered by consuming one more unit of a good or service.

Marginal Cost

The amount spent on generating an extra unit of a product or service.