Select from the best answer below. In the context of addressing a negative exter

ID: 1123076 • Letter: S

Question

Select from the best answer below. In the context of addressing a negative externality such as emissions, an efficient policy is one in which: In which marginal abatement costs across all firms are not equal but which exceed the realized marginal external costs for at least one firm. In which marginal abatement costs across all firms are equalized and exceed the realized marginal external costs. O O In which marginal abatement costs across all firms are equalized and equal the realized marginal external costs. O In which marginal abatement costs across all firms are not equal but which equal the realized marginal external costs for at least one firm

Explanation / Answer

With respect to negative externality, an efficient policy is one that leads to equalization of marginal abatement cost across all firms and bring it equal to the realized marginal external cost.

Thus, the correct answer is the option (3).

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Select from the best answer below. In the context of addressing a negative exter

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Select from the best answer below. In the context of addressing a negative exter

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