In: Economics
Imagine a firm’s marginal abatement cost function with existing technologies is: MAC = 8 – E. If the firm adopts new pollution abatement technologies, its marginal abatement cost function will be: MAC = 4 – 0.5E. With a tax on emissions of $2, the benefits of adopting the new technologies equal: Select one: a. $4. b. $10. c. $2. d. $8.