Suppose that there are two firms, each generating three tons of SO 2 . Suppose also that the government has set a target abatement level of two tons. Under a policy of uniform abatement with permits the firm with the lower marginal abatement cost
A)will abate exactly the same amount of SO2 as the firm with the higher marginal abatement cost.
B)will abate less SO2 than the firm with the higher marginal abatement cost.
C)will abate more SO2 than the firm with the higher marginal abatement cost.
D)will sell its pollution permit to the firm with the higher marginal abatement cost.

Question

Quizplus · Accepted Answer

Under a policy of uniform abatement with permits, each firm is required to abate the same amount of pollution regardless of their marginal abatement costs.

Suppose That There Are Two Firms, Each Generating Three Tons