The Diagram Below Shows the Marginal Costs of Pollution Abatement

question 92

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 .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:

Activity-based Costing

An accounting method that assigns costs to products or services based on the activities that go into producing them, promoting detailed cost management.

Manufacturing Overhead

Manufacturing overhead includes indirect costs associated with manufacturing, such as maintenance, utilities, and quality control, not directly tied to specific units of production.

Activity Cost Pools

Groups of related costs that are allocated to specific activities using cost drivers in activity-based costing systems.

Product X

A placeholder name commonly used to refer to a generic or unspecified product in discussions or examples.