The steeper the marginal abatement cost function, the more a firm will reduce emissions in response to a given emission tax.

The steeper the marginal abatement cost function, the more a firm will reduce emissions in response to a given emission tax.

a.True

b.False

A two-part emission charge

a.would implement a high initial emission charge, then a lower charge for higher levels

b.is implemented when flat charges don’t reduce emission sufficiently

c.may allow a certain level of emissions to go untaxed then taxes emissions above that

d.both of the first two answers are correct

Under an emission charge system, firms will increase abatement as long a the emission charge is greater than the marginal abatement cost.

a.True

b.False

When marginal abatement costs differ across firms, an emissions tax will always achieve a given level of abatement at a lower total abatement cost than a proportionate cutback by all firms.

a.True

b.False

The complication of nonuniform emissions can be addressed by

a.equiproportionate cutbacks in emissions

b.a uniform emissions charge since that would be cost effective

c.zoned emission charges

d.cannot be effectively addressed with emissions charges

One disadvantage of an emissions tax system relative to an emission standard is that the response by firms to the tax, and hence the overall reduction in emissions, is usually not well know in advance of implementing the program.

a.True

b.False