Final answer:
The question focuses on the cost-effective pollution control strategies for firms faced with marginal abatement costs and pollution taxes. Firms will abate emissions as long as the marginal cost is less than the tax, leading to abatement of 30 pounds of particulates in the provided scenario. Efficiency is achieved when the marginal benefits of abatement align with or exceed the marginal costs.
Step-by-step explanation:
The student's question pertains to the quantitative analysis involved in determining the cost-effective approach to pollution abatement for two firms with different marginal costs for reducing emissions. Figures provided convey that as a firm reduces more pollution, the marginal cost of additional pollution abatement increases. This is due to the fact that the most cost-effective measures are utilized first, and as emissions are reduced further, more expensive technologies or methods are required. When a pollution tax is introduced, the firm will evaluate the marginal abatement cost against the tax. If the marginal abatement cost is lower than the pollution tax, the firm has a financial incentive to reduce emissions. Consequently, the firm in question will abate as long as the cost of doing so is less than the tax levied per unit of pollution. In this scenario, the firm elects to abate 30 pounds of particulates to avoid the higher tax costs.
Marginal benefits and marginal costs analyses are used to determine the optimal level of environmental protection. When marginal costs exceed marginal benefits, it implies that too many resources are being used for pollution reduction, leading to an inefficient allocation of resources. This understanding is crucial in deriving the most cost-effective pollution control strategies.