Use the following to answer question:
Figure: City with Two Polluters
-(Figure: City with Two Polluters)Use Figure: City with Two Polluters.If the government wants to limit total pollution to 2,200 tons,it could impose an emissions tax of _____ on both firms.
A)$100
B)$200
C)$300
D)$400

Question

Use the following to answer question:
Figure: City with Two Polluters 
-(Figure: City with Two Polluters)Use Figure: City with Two Polluters.If the government wants to limit total pollution to 2,200 tons,it could impose an emissions tax of _____ on both firms.
A)$100 
B)$200 
C)$300 
D)$400

Quizplus · Accepted Answer

To limit total pollution to 2,200 tons, the government can impose an emissions tax that equalizes the marginal cost of pollution reduction across both firms at the desired total pollution level. Without the specific figure, we typically look for the tax rate that would make reducing pollution to the target level equally costly for both firms, encouraging them to reduce their emissions to the point where their marginal reduction costs equal the tax. A $300 tax per ton would incentivize both firms to adjust their emissions to meet the government's total pollution target efficiently.

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