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Question
Refer to the above figure. Suppose the marginal benefit and the marginal cost curves of pollution abatement are normally shaped. Suppose the equilibrium is for a factory in Los Angeles. What would happen if the same factory were in the middle of Nevada?
A) The marginal cost curve (1) would shift to (2) and there would be no difference in the level of abatement.
B) The marginal cost curve (2) would shift to the left and there would be less abatement in Nevada.
C) The marginal benefit curve (4) would shift to the left and there would be less abatement in Nevada.
D) The marginal benefit curve (2) would shift to the right and there would be more abatement in Nevada.
Answer
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