Imagine a firm’s marginal abatement cost function with existing technologies is: MAC = 12 – E. If the firm adopts new pollution abatement technologies, its marginal abatement cost function will be: MAC = 6 – 0.5E. The adoption costs for the new technology are $6. If the government raises the tax on emissions from $1 to $4, the benefits of adopting the new technologies increase by $____. Select one: a. $7.50. b. $3. c. $4.5. d. $12.

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