If a pollution tax is placed on a firm emitting pollution,the firm will pay the tax,rather than reduce its emissions,as long as the tax is
A)Above its MPC of pollution control
B)Below its MPC of pollution control
C)Above the MSC of pollution control
D)Below the MSC of pollution control
E)Reasonable

Question

Quizplus · Accepted Answer

The firm will pay the tax rather than reduce its emissions as long as the tax is below its Marginal Private Cost (MPC) of pollution control. This is because it is cheaper for the firm to pay the tax than to incur the higher costs associated with reducing emissions.

If a Pollution Tax Is Placed on a Firm Emitting