The diagram below shows the marginal costs of pollution abatement for two firms, Firm 1and Firm 2.Dollars6050403020100Firm 1FIGURE 17-5MC₁li lz ls ls ls lo lAbatementDollars6050403020100Firm 2MC₂li z ls ls ls Q6 Q7AbatementRefer to Figure 17-5. Suppose Firm 1 and Firm 2 are each abating Q3 units ofpollution. If the government imposed an emissions tax of $40 per unit of emissions,OA) each firm would abate to the same level.B)Firm 2 would increase abatement beyond Q3 and Firm 1 would abate lessthan Q3.C) each firm would abate to Q3.D) the level of pollution would be optimal.E)Firm 1 would increase abatement beyond Q3 and Firm 2 would abate less thanQ3.

The diagram below shows the marginal costs of pollution abatement for two firms, Firm 1 and Firm 2. Dollars 60 50 40 30 20 10 0 Firm 1 MC₁ Dollars 60 50 40 30 20 10 0 Firm 2 MC₂ Q₁ Q₂ Q3 Qs Qs Q Q7

The diagram below shows the marginal costs of pollution abatement for two firms, Firm 1 and Firm 2. Dollars 60 50 40 30 20 10 0 Firm 1 MC₁ Dollars 60 50 40 30 20 10 0 Firm 2 MC₂ Q₁ Q₂ Q3 Qs Qs Q Q7

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter10: Externalities

Section: Chapter Questions

Problem 9PA

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Question

The diagram below shows the marginal costs of pollution abatement for two firms, Firm 1
and Firm 2.
Dollars
60
50
40
30
20
10
0
Firm 1
FIGURE 17-5
MC₁
li lz ls ls ls lo l
Abatement
Dollars
60
50
40
30
20
10
0
Firm 2
MC₂
li z ls ls ls Q6 Q7
Abatement
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,
OA) each firm would abate to the same level.
B)
Firm 2 would increase abatement beyond Q3 and Firm 1 would abate less
than Q3.
C) each firm would abate to Q3.
D) the level of pollution would be optimal.
E)
Firm 1 would increase abatement beyond Q3 and Firm 2 would abate less than
Q3.

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