The diagram below shows the marginal costs of pollution abatement for two firms,Firm 1 and Firm 2. FIGURE 17-5
-Refer to Figure 17-5.If the government requires each firm to abate Q₃units of pollution,the social costs of this abatement

Question

The diagram below shows the marginal costs of pollution abatement for two firms,Firm 1 and Firm 2.

FIGURE 17-5
-Refer to Figure 17-5.If the government requires each firm to abate Q₃units of pollution,the social costs of this abatement

Quizplus · Accepted Answer

The social costs could be reduced if Firm 1, which likely has a lower marginal cost of abatement, increased its abatement while Firm 2, with a higher marginal cost, reduced its abatement by the same amount.

The Diagram Below Shows the Marginal Costs of Pollution Abatement