UMass

RESEC 262 Summer

a

4) The firm in the graph below faces a tax for each unit of emissions that it

releases.

Marginal abatement cost

b

Emissions

Problem

a. Clearly mark in the graph the firm's choice of emissions when it

faces the tax 7. [1 point]

b. What is the: [3 points]

i. total tax bill

ii. total abatement costs, and

iii. total compliance costs when it faces the tax 7.