The diagram below shows the marginal costs of pollution abatement for two firms, Firm 1 and Firm 2.
FIGURE 17- 5
-Refer to Figure 17- 5. If the government requires each firm to abate Q3 units of pollution, the social costs of this abatement
A) could be reduced further if Firm 2 increased abatement and Firm 1 reduced its abatement by the same amount.
B) could be reduced further if each firm was required to abate more.
C) could be reduced further if each firm was allowed to pollute more.
D) would be minimized.
E) could be reduced further if Firm 1 increased its abatement and Firm 2 reduced its abatement by the same amount.
Correct Answer:
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