Review the figure above. When enforcement costs are considered, abatement costs _______ and the socially optimal level of emissions ______________ .

Question

Quizplus · Accepted Answer

When enforcement costs are considered, abatement costs increase because firms must now spend money on monitoring and enforcing compliance with environmental regulations. This leads to a higher marginal cost of abatement, which in turn leads to a lower socially optimal level of emissions.

Review the Figure Above