The Diagram Below Shows the Marginal Costs of Pollution Abatement

question 113

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 Firm 1 and Firm 2 are each abating Q₃ units of pollution.If the government imposes an emissions tax of $20 per unit of emissions,

• A)Firm 1 will abate less than Q₃,and Firm 2 will not abate any pollution at all.
• B)neither firm will abate any pollution.
• C)the level of pollution abatement will be optimal.
• D)Firm 1 will increase abatement beyond Q₃ and Firm 2 will abate less than Q₃.
• E)Firm 1 and Firm 2 will each increase abatement beyond Q₃.

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