Question :
61) Refer to Figure 17-4. Ignore the horizontal line at : 1384323
61) Refer to Figure 17-4. Ignore the horizontal line at t. Suppose the government requires each firm to reduce pollution by the same amount, QR. The result will be
A) fair and just because both firms are facing the same requirements.
B) economically inefficient because Firm X is not producing as much pollution as Firm Y and therefore should not be faced with the same requirements.
C) economically efficient because even though their marginal costs of abatement differ, the marginal cost for the last unit of abatement is equal.
D) economically inefficient because Firm Y is then abating pollution at a higher marginal cost than Firm X.
E) economically efficient because the maximum amount of pollution will be abated.
62) Refer to Figure 17-4. Ignore the horizontal line at t. Suppose Firms X and Y are each abating QR units of pollution. If Firm X then reduces pollution by one unit and Firm Y increases pollution by one unit, then
A) total pollution remains the same but the total cost of abatement falls.
B) total pollution remains the same but the total cost of abatement increases.
C) the total cost of abatement remains the same but pollution falls.
D) the total cost of abatement remains the same but pollution increases.
E) the total costs of abatement and the amount of pollution do not change.
63) Refer to Figure 17-4. Ignore the horizontal line at t. The optimal amount of pollution abatement for these two firms together is
A) QR for X + QR for Y.
B) QR for X + Qy for Y.
C) Qx for X + QR for Y.
D) Qx + Qy.
E) impossible to tell without the marginal benefit of abatement curve.
64) Refer to Figure 17-5. If the government requires each firm to abate Q3 units of pollution, the social costs of this abatement
A) would be minimized.
B) could be reduced further if each firm was required to abate more.
C) could be reduced further if Firm 1 increased its abatement and Firm 2 reduced its abatement by the same amount.
D) could be reduced further if Firm 2 increased abatement and Firm 1 reduced its abatement by the same amount.
E) could be reduced further if each firm was allowed to pollute more.
65) Refer to Figure 17-5. Suppose the government requires that each firm abate pollution to the level Q3. The outcome would be efficient because
A) the marginal costs of abatement are equated for the two firms.
B) the maximum amount of pollution is being abated at the lowest cost.
C) the marginal cost and marginal benefit of pollution abatement are equated.
D) all of the above.
E) none of the above; the outcome would be inefficient.
66) Two firms, A and B, are legally required to reduce their toxic emissions. If Firm A’s marginal cost of abatement is $5 and Firm B’s marginal cost of abatement is $3,
A) their joint total cost of abatement is at a minimum.
B) their joint total cost of abatement is at a maximum.
C) the socially optimal joint level of abatement is not being achieved.
D) Firm A should abate more and Firm B should abate less in order to reduce total abatement costs.
E) Firm B should abate more and Firm A should abate less in order to reduce total abatement costs.
67) Two firms, A and B, are legally required to reduce their toxic emissions. If Firm A’s marginal cost of abatement is $5 and Firm B’s marginal cost of abatement is $5,
A) their joint total cost of abatement is at a minimum.
B) their joint total cost of abatement is at a maximum.
C) the socially optimal joint level of abatement is not being achieved.
D) Firm A should abate more and Firm B should abate less.
E) Firm B should abate more and Firm A should abate less.
68) Direct pollution controls are usually inefficient because they
A) do not minimize the total cost of a given amount of abatement.
B) lead all firms to abate more pollution than the socially optimal amount.
C) lead all firms to abate less pollution than the socially optimal amount.
D) do not achieve the targeted amount of pollution abatement.
E) are controlling quantities of pollution abatement as opposed to prices.
69) Refer to Figure 17-4. Ignore the horizontal line at t. If the government wanted to impose an emissions tax, efficiency requires that it
A) levy a tax at the same rate to both firms.
B) choose a different tax rate for each firm so that each firm abates QR units of pollution.
C) impose the same tax on both firms and also fix the amount of pollution abatement at QR for each firm.
D) tax only the high-cost firm (Firm Y) and fix the amount of pollution abatement for the low-cost firm (Firm X).
E) tax only the low-cost firm (Firm X) and fix the amount of pollution abatement for the high-cost firm (Firm Y).
70) Refer to Figure 17-4. Firms X and Y have an emissions tax of $t imposed on each unit of pollution they produce. Firm X will choose to abate pollution of ________ units and Firm Y will choose to abate pollution of ________ units.
A) QX; QY
B) 0; 0
C) QR; QR
D) QX; QR
E) QR; QY
