The figure below shows the marginal benefit (demand) of polluting for two firms: Alpha and Beta. Before the introduction of a pollution tax, pollution is free, that is, MC = $0 per ton of emissions. Marginal Benefit (MB) to Firm Tax = $100 0 MB BETA MBALPHA 25 50 75 100 Emissions (tons) The government decides to impose a tax on pollution of $100 per ton of emissions. That is, the per-unit the tax is the marginal cost of polluting. Which of the follow are true? (Select all that are true.) a. As a result of the tax, the total emissions will decrease by 50 units b. The tax was intended to decrease production by 50 units for each firm. c. As a result of the tax, both firms will decrease emissions by the same amount d. After the tax is imposed, Firm Beta will emit 50 tons more pollution than Firm Alpha e. Before the tax is imposed, Firm Beta emitted more pollution than Firm Alpha f. As a result of the tax, total emissions from the two firms will be cut in half g. The amount of tax collected is $2500 h. As a result of the tax, Firm Alpha will reduce its emissions by more than Firm Beta

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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The figure below shows the marginal benefit (demand) of polluting for two firms: Alpha and Beta. Before the introduction of a
pollution tax, pollution is free, that is, MC = $0 per ton of emissions.
Marginal
Benefit (MB)
to Firm
Tax = $100
0
MB BETA
MBALPHA
25
50
75
100 Emissions
(tons)
The government decides to impose a tax on pollution of $100 per ton of emissions. That is, the per-unit the tax is the marginal
cost of polluting. Which of the follow are true? (Select all that are true.)
a. As a result of the tax, the total emissions will decrease by 50 units
b. The tax was intended to decrease production by 50 units for each firm.
c. As a result of the tax, both firms will decrease emissions by the same amount
d. After the tax is imposed, Firm Beta will emit 50 tons more pollution than Firm Alpha
e. Before the tax is imposed, Firm Beta emitted more pollution than Firm Alpha
f. As a result of the tax, total emissions from the two firms will be cut in half
g. The amount of tax collected is $2500
h. As a result of the tax, Firm Alpha will reduce its emissions by more than Firm Beta
Transcribed Image Text:The figure below shows the marginal benefit (demand) of polluting for two firms: Alpha and Beta. Before the introduction of a pollution tax, pollution is free, that is, MC = $0 per ton of emissions. Marginal Benefit (MB) to Firm Tax = $100 0 MB BETA MBALPHA 25 50 75 100 Emissions (tons) The government decides to impose a tax on pollution of $100 per ton of emissions. That is, the per-unit the tax is the marginal cost of polluting. Which of the follow are true? (Select all that are true.) a. As a result of the tax, the total emissions will decrease by 50 units b. The tax was intended to decrease production by 50 units for each firm. c. As a result of the tax, both firms will decrease emissions by the same amount d. After the tax is imposed, Firm Beta will emit 50 tons more pollution than Firm Alpha e. Before the tax is imposed, Firm Beta emitted more pollution than Firm Alpha f. As a result of the tax, total emissions from the two firms will be cut in half g. The amount of tax collected is $2500 h. As a result of the tax, Firm Alpha will reduce its emissions by more than Firm Beta
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