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)

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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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)
Transcribed Image Text: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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