Fill-in-the-Blank
1. Fill in the blanks to make the following statements correct.
a. The cost associated with eliminating one extra unit of
pollution is referred to as the of abatement.
b. The benefit associated with eliminating one extra unit of
pollution is referred to as the of abatement.
c. The optimal amount of pollution abatement occurs where
the equals the.
d. Typically, the optimal amount of pollution will be
than zero.
2. Fill in the blanks to make the following statements correct.
a. When there are pollution externalities associated with the
production of steel, marginal costs of steel
production exceed marginal costs of steel
production.
b. By imposing a on the production of steel, the
externality can be.
c. If the tax is chosen to be exactly equal to the
externality can be completely internalized. The result will
be that private firms produce the level of steel
(and pollution).
3. Fill in the blanks to make the following statements correct.
a. If the marginal cost of pollution abatement is equal across
all firms in the economy, then pollution is being reduced