Requiring that a firm engage in pollution abatement will likely do all of the following except

Question

Quizplus · Accepted Answer

Requiring a firm to engage in pollution abatement will increase the firm's costs, and thus shift its MC curve upward. This will reduce the amount of output the firm produces, and could potentially reduce its profits. However, it is unlikely to shift the firm's ATC curve downward, as pollution abatement is a cost that would increase the firm's average costs. Therefore, option D is the only incorrect statement.

Requiring That a Firm Engage in Pollution Abatement Will Likely