Figure 5B
-Refer to Figure 5B. Assume that the initial effluent tax in the amount of tk, or $20 per unit of waste discharged and that the MCC curve represents the nature of the pollution control technology of this firm. Which of the following is correct?
A) A private firm interested in minimizing its cost would control 0 units of waste
using its technology to clean the waste.
B) If the firm decided to reduce its emission to 100 units, then paying the tax would
be cheaper than to clean the waste.
C) If the firm decided to reduce its emission to 100 units, then paying the tax would
be more expensive than to clean the waste.
D) If the firm decided to reduce its emission to 100 units, then paying the tax would
cost the same as cleaning the waste.
Correct Answer:
Verified
