Final answer:
The correct answer to the question is that both the marginal costs of pollution reduction and the marginal costs of pollution damage increase as pollution levels increase.option 2 is correct answer.
Step-by-step explanation:
The question regarding how the marginal costs of pollution reduction and the marginal costs of pollution damage change as pollution levels increase can be answered with reference to basic economic principles. As pollution levels increase, the marginal costs of reducing that pollution generally increase as well. This is due to the fact that the cost-effective and simple methods are utilized first, and as more reductions are needed, more expensive and complex methods become necessary.
Simultaneously, the marginal costs of pollution damage also tend to increase since additional pollution can have exponentially detrimental effects on health, ecosystems, and economic activities.
The correct answer to how these costs change is that the marginal costs of pollution reduction increase and the marginal costs of pollution damage increase. Initially, firms might find it relatively inexpensive to reduce pollution, but as they need to cut down on more pollution, they have to adopt more expensive technologies or processes.
Likewise, initial pollution might cause limited damage, but as pollution increases, the incremental damage it causes usually rises significantly as well. This increased damage can manifest in various forms such as health problems, loss of biodiversity, and decreased productivity in affected areas.