If the abatement level were 20 percent, what would be the levels of MACmktand MCE? What do these values convey about total abatement costs incurred by polluting sources and by government at this 20 percent abatement level?
What will be an ideal response?
If A = 20 percent, MCE = 0.15 (20) = $3 million and MACmkt = 0.65 (20) = $13 million. Since these are marginal values, they communicate the change in total costs associated with a change in abatement level. Therefore, if mercury abatement is increased to 20percent, the government’s total costs of enforcement would increase by $3 million, and aggregate abatement costs of all polluters across the nation would increase by $13 million.
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