On the graph below, if the government grants a firm an abatement subsidy to reduce emissions down to the socially optimal level, the effect on the government budget will be: 4 2 18 20 a. A gain of $2,000 b. A loss of $4,000 1 C. A loss of $36,000 d. A gain of $8,000 MBE SMCE MCE → E (1,000 tons)

On the graph below, if the government grants a firm an abatement subsidy to reduce emissions down to the socially optimal level, the effect on the government budget will be: 4 2 18 20 a. A gain of $2,000 b. A loss of $4,000 1 C. A loss of $36,000 d. A gain of $8,000 MBE SMCE MCE → E (1,000 tons)

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter10: Externalities

Section: Chapter Questions

Problem 3CQQ

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Question

Please give me answer with detail explanation

On the graph below, if the government grants a firm an abatement subsidy to reduce
emissions down to the socially optimal level, the effect on the government budget will be:
4
2
O
18
a.
A gain of $2,000
b. A loss of $4,000
C. A loss of $36,000
d. A gain of $8,000
20
MBE
SMCE
MC E
€ (1,000 tons)

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