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Draw a graph with pollution abatement on the horizontal axis (assume a firm can remove up to 100 tons of pollution) and dollars (S) on
Draw a graph with pollution abatement on the horizontal axis (assume a firm can remove up to 100 tons of pollution) and dollars (S) on the vertical axis. Draw one firm's marginal abatement cost curve (MC). Say a pollution tax is imposed on the firm. a. What are the costs the firm would incur if they chose to not reduce pollution at all? b. Is there a different level of pollution abatement the firm could choose that would result in lower costs? c. Label that level of abatement A* on your graph and shade in the area that represents the cost - savings as compared to when they polluted 100 tons (did no abatement)
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