In Figure 28.1, emission fees will

Question

Quizplus · Accepted Answer

Emission fees are a form of market-based environmental policy that aims to reduce negative externalities by increasing the marginal cost of production for firms that emit pollutants. By doing so, it incentivizes firms to reduce emissions or find cleaner alternatives, ultimately leading to a reduction in pollution. Therefore, emission fees will increase the marginal cost of production (choice B) for the firms, but they will not reduce external benefits (choice A), raise marginal revenues (choice C), or shift the marginal cost of production to the right (choice D).

In Figure 28.1, Emission Fees Will