Draw a graph with pollution abatement on the horizontal axis (assume a firm can remove up to 100 tons of pollution) and dollars ($) on the vertical axis. Draw one firm's marginal abatement cost curve (MC). Say a pollution tax is imposed on the firm. a. What are the costs the firm would incur if they chose to not reduce pollution at all? b. Is there a different level of pollution abatement the firm could choose that would result in lower costs? c. Label that level of abatement A* on your graph and shade in the area that represents the cost-savings as compared to when they polluted 100 tons (did no abatement)

Draw a graph with pollution abatement on the horizontal axis (assume a firm can remove up to 100 tons of pollution) and dollars ($) on the vertical axis. Draw one firm's marginal abatement cost curve (MC). Say a pollution tax is imposed on the firm. a. What are the costs the firm would incur if they chose to not reduce pollution at all? b. Is there a different level of pollution abatement the firm could choose that would result in lower costs? c. Label that level of abatement A* on your graph and shade in the area that represents the cost-savings as compared to when they polluted 100 tons (did no abatement)

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter5: Difficult Cases For The Market And The Role Of Government

Section: Chapter Questions

Problem 10CQ

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