The diagram below shows the marginal cost of abatement for each of two firms,A and B.Each firm is initially abating Q0 units of pollution.
FIGURE 17- 6
-Refer to Figure 17- 6.Suppose that a system of tradable pollution permits is introduced into this market and the equilibrium permit price is p*.The effect will be that
A) there will be no change in the quantity of abatement by each firm.
B) Firms A and B will each abate Q2 units of pollution.
C) Firm A will abate less pollution-the amount Q2,and Firm B will abate more pollution-the amount Q1.
D) Firms A and B will each abate Q0 units of pollution.
E) Firm B will abate less pollution-the amount Q2,and Firm A will abate more pollution-the amount Q1.
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