The diagram below shows the marginal cost of pollution abatement for two firms,Firm X and Firm Y.
FIGURE 17-6
-Refer to Figure 17-6.Firms X and Y have an emissions tax of $t imposed on each unit of pollution they produce.Firm X will choose to abate pollution of ________ units and Firm Y will choose to abate pollution of________ units.

Question

The diagram below shows the marginal cost of pollution abatement for two firms,Firm X and Firm Y.
  FIGURE 17-6
-Refer to Figure 17-6.Firms X and Y have an emissions tax of $t imposed on each unit of pollution they produce.Firm X will choose to abate pollution of ________ units and Firm Y will choose to abate pollution of________ units.

Quizplus · Accepted Answer

Firm X will choose to abate pollution up to the point where MCX = t, which is at QX. 
Firm Y will choose to abate pollution up to the point where MCY = t, which is at QY. Therefore, the firms will choose to abate different amounts of pollution.

The Diagram Below Shows the Marginal Cost of Pollution Abatement