Figure 16.1A firm that generates pollution is illustrated in Figure 16.1. If the government imposes a pollution tax equal to P2, and the firm's abatement level is A3, the firm is:
A. abating more than is optimal for the firm.
B. abating less than is optimal for the firm.
C. choosing an abatement level that is optimal.
D. violating the environmental protection laws.
Answer: A
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