In the single-polluter case, a firm faced with an emission charge for pollution implemented as a marginal tax (MT) will abate as long as MAC

Question

In the single-polluter case, a firm faced with an emission charge for pollution implemented as a marginal tax (MT) will abate as long as MAC < MT.

Quizplus · Accepted Answer

If the Marginal Abatement Cost (MAC) is less than the Marginal Tax (MT) imposed by the government for each unit of pollution, then the firm will find it profitable to reduce pollution and abate. Therefore, the statement is true.

In the Single-Polluter Case, a Firm Faced with an Emission