Question

suppose a polluting firm is faced with a pollution tax. the firm will choose to abate pollution so long as the

Answer 1

The firm will choose to abate pollution as long as the marginal abatement cost is lower than the tax.

Concept:-

The efficient level of abatement is acheived when the marginal benefit equals to the marginal abatement cost, economic point of view the polluting firm will think that it is more cheaper to abate carbon emissions as long as the marginal abatement cost is lower than the pollution tax imposed on them, if the marginal abatement cost is more than the pollution tax, then the firm will choose to pay pollution tax and continue doing emissions.