If an abatement standard is set to achieve allocative efficiency at the national level, then
A) that standard necessarily achieves allocative efficiency in all regions
B) the standard cannot be optimal at the regional level unless the MSB and MSC for all regions are identical to one another
C) all regions will abate below the optimal level
D) at that abatement standard, all regions will face MSC higher than MSB

Question

Quizplus · Accepted Answer

Allocative efficiency requires the MSB and MSC to be equal, which may not be the case in all regions. Therefore, the abatement standard may not be optimal at the regional level unless the MSB and MSC for all regions are identical to one another. This suggests that the standard set to achieve allocative efficiency at the national level may not be optimal for all regions.

If an Abatement Standard Is Set to Achieve Allocative Efficiency