Figure 9.7
-A firm that generates pollution is illustrated in Figure 9.7. The government has chosen to impose a pollution tax equal to P₂. From the firm's point of view, the marginal benefit of abatement is
A) avoiding the pollution tax imposed by the government.
B) the positive publicity the firm will receive by having a "green" production plant.
C) the reciprocal of the marginal cost of abatement.
D) zero because abatement benefits the general public, not the firm.

Question

Figure 9.7
-A firm that generates pollution is illustrated in Figure 9.7. The government has chosen to impose a pollution tax equal to P₂. From the firm's point of view, the marginal benefit of abatement is
A) avoiding the pollution tax imposed by the government. 
B) the positive publicity the firm will receive by having a "green" production plant. 
C) the reciprocal of the marginal cost of abatement. 
D) zero because abatement benefits the general public, not the firm.

Quizplus · Accepted Answer

The marginal benefit of abatement for the firm is avoiding the pollution tax imposed by the government. By reducing pollution, the firm incurs lower taxes, which directly benefits it financially.

Figure 9.7 -A Firm That Generates Pollution Is Illustrated in Figure 9.7