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citycyborg citycyborg
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A year ago

The diagram below shows the marginal costs of pollution abatement for two firms, Firm 1 and Firm 2.

Short description: Two abatements versus cost graphs are plotted, comparing two firms numbered Firm 1 and Firm 2. Long description: In both graphs, the horizontal axis denotes abatement, ranging from Q subscript 1 through 7 in increments of 1. The vertical axis denotes dollars ranging from 0 to 60 in increments of 10. Firm 1: an increasing line M C subscript 1 is drawn starting at (0, 10), with a point marked. The point is (Q subscript 3, 30). Firm 2: an increasing line M C subscript 2 is drawn starting at (0, 30). The point marked on the line is (Q subscript 3, 50).

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,



▸ Firm 1 and Firm 2 will each increase abatement beyond Q3.

▸ Firm 1 will abate less than Q3, and Firm 2 will not abate any pollution at all.

▸ Firm 1 will increase abatement beyond Q3 and Firm 2 will abate less than Q3.

▸ the level of pollution abatement will be optimal.

▸ neither firm will abate any pollution.
Textbook 
Microeconomics

Microeconomics


Edition: 17th
Author:
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patriciakim08patriciakim08
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A year ago
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citycyborg Author
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A year ago
Good timing, thanks!
DaiwalkerX
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Yesterday
Smart ... Thanks!
gmiannotti
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2 hours ago
Brilliant ツ
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