Question

You are on the staff of a government official who wants to set the target for a new air pollution program on the following basis. She tells you, “I have seen the marginal abatement cost curve for controlling this pollutant, and it turns upward at a 15% reduction in emissions. This ‘elbow of the curve analysis’ tells us that it will be efficient to set the target at 15%.” Please assess your boss’s reasoning, using a graph to explain your response.

Answer 1