Review
6. The following diagram shows society’s marginal benefit and
marginal cost for abating a particular type of pollution—say,
greenhouse-gas emissions.a. Explain why the marginal cost curve is upward sloping.
b. Explain why the marginal benefit curve is downward
sloping.
c. At are all greenhouse-gas emissions eliminated?
Explain.
d. Is there an “optimal” level of greenhouse-gas emissions?
Explain.
7. Suppose the government issues a fixed quantity, of tradable
pollution permits, each one permitting the emission of one tonneQ∗,Q∗,