The diagram below shows the marginal cost of pollution abatement for two firms,Firm X and Firm Y.
FIGURE 17-6
-Refer to Figure 17-6.Ignore the horizontal line at t.If the government wanted to impose an emissions tax,efficiency requires that it

Question

The diagram below shows the marginal cost of pollution abatement for two firms,Firm X and Firm Y.
  FIGURE 17-6
-Refer to Figure 17-6.Ignore the horizontal line at t.If the government wanted to impose an emissions tax,efficiency requires that it

Quizplus · Accepted Answer

Efficiency in pollution abatement is achieved when the marginal abatement costs are equalized across firms. Imposing the same tax rate on both firms incentivizes them to adjust their pollution levels until their marginal abatement costs equal the tax rate, leading to an efficient outcome.

The Diagram Below Shows the Marginal Cost of Pollution Abatement