Imagine a firm's marginal abatement cost function with existing technologies is: MAC = 8- E. If the firm adopts new pollution abatement technologies, its marginal abatement cost function will be: MAC = 4 -0.5E. If the government raises the tax on emissions from $1 to $2, the benefits of adopting the new technologies increase by $ Answer: Imagine a firm's marginal abatement cost function with existing technologies is: MAC = 8-E. If the firm adopts new pollution abatement technologies, its marginal abatement cost function will be: MAC = 4-0.5E. The adoption costs for the new technology are $1. If the government raises the tax on emissions from $1 to $2, the firm's total costs increase by $ HINT Total costs include tax payments, total abatement costs, and (if relevant) adoption costs for the new technology.

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