The marginal cost of enforcement (MCE) must be added vertically to the MAC_mkt to derive the marginal social cost (MSC) of abatement function.

Question

Quizplus · Accepted Answer

This statement is true as marginal cost of enforcement (MCE) is an additional cost incurred to enforce regulations on pollution abatement. When added to the marginal abatement cost (MAC_mkt), it gives the total cost of reducing pollution, which is the marginal social cost (MSC).

The Marginal Cost of Enforcement (MCE) Must Be Added Vertically