Left alone, with no government interference, a profit-maximizing firm will produce emissions:
A) where the MSB curve crosses the MCA curve.
B) at the vertical intercept of the MSB curve.
C) at the horizontal intercept of the MSB curve.
D) at the vertical intercept of the MCA curve.
E) at the horizontal intercept of the MCA curve.

Question

Quizplus · Accepted Answer

A profit-maximizing firm will produce emissions where its marginal cost of abatement (MCA) is zero, which is at the horizontal intercept of the MCA curve, as it seeks to minimize costs without considering externalities.

Left Alone, with No Government Interference, a Profit-Maximizing Firm Will