If the marginal damage curve is above the marginal abatement cost curve at the current quantity of emissions, the socially optimal amount of emissions

Question

Quizplus · Accepted Answer

When the marginal damage curve is above the marginal abatement cost curve, it indicates that the cost of the damage caused by an additional unit of emissions is greater than the cost to reduce (abate) that unit of emissions. Therefore, reducing emissions to a point where these two costs are equal would be more socially optimal, implying that the current amount of emissions is too high and should be decreased.

If the Marginal Damage Curve Is Above the Marginal Abatement