Question

stion 12 Refer to the information in Figure 16.5 below to answer the question that follows 1 points Save Ans Marginal Benefit ( M A TA to Firm MW Tax S100 100 Emissions Suppose that instead of the $100 tax, the government ses standards to achieve the emission reductions, requiring that each company cut its original missions in half rather than allowing each company to choose omissions based on their costs. Compared to the situation under the tax, Alpha would and Beta would be able to increase emissions have to further reduce emissions be able to increase emissions: be able to increase omissions have to further reduce emissions have to further reduce emissions have to further reduce emissions: be able to increase omissions

plwase dont answrr I know the answer now

Answer 1

In the first case where there is a tax of $100 on emissions, each company will produce emissions till their marginal cost for emissions (which is 100) will be equal to marginal benefit. It is clear from the graph that beta will produce 75 emissions and alpha will produce 25 emissions in this case.

If the government asks them to simply cut their emissions in half, it means that each will have to cut their emissions till 50 (since without any tax or regulations, both will produce 100 emissions). This means that beta's emissions will go down from 75 in tax case to 50 while alpha's will rise from 25 in case of tax to 50.

Hence the correct option is A- alpha will be able to increase while beta will have reduce.