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The Government of Yokuku considers applying one of the following policies: a tax or a standard, in order to reduce pollution level from P to Po. The government economist drew the following graph, representing the marginal abatement cost (MAC) to the polluters, the marginal damage to the society (MD), the optimal tax level (Tax level) and the socially optimal pollution level (Po).   1.1 What is the total abatement cost to the polluter under the tax policy?  A B A+B A+B+C 1.2 What is the total abatement cost to the polluter under the standard policy?  A B A+B A+B+C   1.3 What is the total damage cost under the tax policy?  A B A+B A+B+C

The Government of Yokuku considers applying one of the following policies: a tax or a standard, in order to reduce pollution level from P to Po. The government economist drew the following graph, representing the marginal abatement cost (MAC) to the polluters, the marginal damage to the society (MD), the optimal tax level (Tax level) and the socially optimal pollution level (Po).   1.1 What is the total abatement cost to the polluter under the tax policy?  A B A+B A+B+C 1.2 What is the total abatement cost to the polluter under the standard policy?  A B A+B A+B+C   1.3 What is the total damage cost under the tax policy?  A B A+B A+B+C

Microeconomic Theory
Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter19: Externalities And Public Goods
Section: Chapter Questions
Problem 19.9P
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The Government of Yokuku considers applying one of the following policies: a tax or a standard, in order to reduce pollution level from P to Po. The government economist drew the following graph, representing the marginal abatement cost (MAC) to the polluters, the marginal damage to the society (MD), the optimal tax level (Tax level) and the socially optimal pollution level (Po).

 

1.1 What is the total abatement cost to the polluter under the tax policy? 

  1. A
  2. B
  3. A+B
  4. A+B+C



1.2 What is the total abatement cost to the polluter under the standard policy? 

  1. A
  2. B
  3. A+B
  4. A+B+C

 

1.3 What is the total damage cost under the tax policy? 

  1. A
  2. B
  3. A+B
  4. A+B+C

 

 

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