The Following Questions Refer to the graph below. -A tax of more than T₁ per unit on polluted discharge will induce the firm to clean up A)Q₁ B)More than q₁ C)Q D)More than q but less than q₁ E)Zero

Question

Quizplus · Accepted Answer

If the tax on polluted discharge is increased to more than q₁, the marginal cost of polluting will exceed the marginal cost of cleaning up. Therefore, it will become profitable for the firm to invest in pollution abatement technologies and reduce their pollution.

The Following Questions Refer to the Graph Below