Figure 9.6
-A firm that generates pollution is illustrated in Figure 9.6. If the government imposes a pollution tax equal to P3 the firmʹs abatement choice will be

Question

Quizplus · Accepted Answer

The pollution tax equal to P3 will shift the marginal abatement cost curve upward by P3. The firm will choose the abatement level where the marginal abatement cost equals the pollution tax, which is at A1.

Figure 9.6 -A Firm That Generates Pollution Is Illustrated in Figure 9.6