Exhibit 17-5 -In Exhibit 17-5,if the government does not charge firms for emitting pollutants into a river, A)firms will emit Q₁ units of pollutant at a price of P₀ each B)firms will emit Q₂ units of pollutant at a price of P₀ each C)firms will emit Q₀ units of pollutant at a price of P₃ each D)firms will emit Q₁ units of pollutant at a price of P₁ each E)firms will emit Q₂ units of pollutant at a price of P₃ each

Question

Quizplus · Accepted Answer

If the government does not charge firms for emitting pollutants, firms will emit the quantity where their marginal cost of pollution is zero, which is typically the maximum quantity, Q₂, at a price of P₀ each, assuming no cost for pollution.

Exhibit 17-5 -In Exhibit 17-5,if the Government Does Not Charge Firms for Charge