If electric utilities continually reduce their emissions of sulphur dioxide,
A)the utilities will eventually be forced to go out of business.
B)the marginal benefit of additional emissions will rise.
C)the marginal cost of further emissions will rise.
D)the total benefit of sulphur dioxide emissions will fall.

Question

Quizplus · Accepted Answer

As electric utilities reduce their emissions of sulphur dioxide, the marginal cost of further emissions will rise because it becomes more expensive to reduce emissions further. This means that the cost of producing one additional unit of sulphur dioxide emissions will increase, making it more expensive for utilities to continue emitting at high levels. As a result, the total benefit of sulphur dioxide emissions will fall because the costs of emissions are becoming higher. Therefore, the marginal cost of further emissions will rise.

If Electric Utilities Continually Reduce Their Emissions of Sulphur Dioxide