The Diagram Below Shows the Marginal Costs of Pollution Abatement

question 5

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 imposed an emissions tax of $40 per unit of emissions,

• A)each firm would abate to Q₃.
• B)each firm would abate to the same level.
• C)Firm 1 would increase abatement beyond Q₃ and Firm 2 would abate less than Q₃.
• D)Firm 2 would increase abatement beyond Q₃ and Firm 1 would abate less than Q₃.
• E)the level of pollution would be optimal.

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