The diagram below shows a market for tradable pollution permits.
Figure 17- 7
-Refer to Figure 17- 7,which depicts the market for tradable pollution permits.If there is an increase in firms' marginal cost of pollution abatement,

Question

The diagram below shows a market for tradable pollution permits.
  Figure 17- 7
-Refer to Figure 17- 7,which depicts the market for tradable pollution permits.If there is an increase in firms' marginal cost of pollution abatement,

Quizplus · Accepted Answer

When firms' marginal cost of pollution abatement increases, it becomes more expensive for them to reduce pollution. As a result, they will demand more pollution permits to avoid the higher costs associated with abatement.

The Diagram Below Shows a Market for Tradable Pollution Permits