The diagram below shows the marginal cost of pollution abatement for two firms, Firm X and Firm Y.

FIGURE 17-4

Refer to Figure 17-4. Ignore the horizontal line att. Suppose the government requires each firm to reduce pollution by the same amount,Q_R. The result will be

Question 6 options:

fair and just because both firms are facing the same requirements.

economically efficient because even though their marginal costs of abatement differ, the marginal cost for the last unit of abatement is equal.

economically inefficient because Firm Y is then abating pollution at a higher marginal cost than Firm X.

economically inefficient because Firm X is not producing as much pollution as Firm Y and therefore should not be faced with the same requirements.

economically efficient because the maximum amount of pollution will be abated.