Suppose that a firm's marginal abatement cost function with existing technologies is MAC = 16  - 2E. If the firm adopts new pollution abatement technologies, then its marginal abatement cost

Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter19: Externalities And Public Goods
Section: Chapter Questions
Problem 19.9P
icon
Related questions
Question

Suppose that a firm's marginal abatement cost function with existing technologies is MAC = 16  - 2E. If the firm adopts new pollution abatement technologies, then its marginal abatement cost function will become MAC = 8  - E. If the government raises the emissions tax from $2 to $3, then the benefits of adopting the new technologies increase by $____.

(Hint: recall that the benefits from adopting new technologies are simply the difference in total compliance costs.)

 

THE ANSWER IS NOT 2 or 1.75

Might be 1.25 or 4.50

Expert Solution
steps

Step by step

Solved in 3 steps with 2 images

Blurred answer
Knowledge Booster
Carbon Tax
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Microeconomic Theory
Microeconomic Theory
Economics
ISBN:
9781337517942
Author:
NICHOLSON
Publisher:
Cengage