Author Question: When emissions are measured on the horizontal axis, the marginal cost of abating emissions is A) ... (Read 115 times)

futuristic · **on:** Jul 1, 2018

When emissions are measured on the horizontal axis, the marginal cost of abating emissions is

A) downward-sloping because emissions become more and more easy to eliminate once the firm makes the initial commitment to do so.
B) downward-sloping because a high level of emissions is cheap to attain, and a low level of emissions is expensive to attain.
C) upward-sloping because emissions become more and more easy to eliminate once the firm makes the initial commitment to do so.
D) upward-sloping because a high level of emissions is cheap to attain, and a low level of emissions is expensive to attain.
E) horizontal because the technology to remove emissions is assumed constant.

Question 2

Which statement most nearly describes a Nash equilibrium applied to price competition?

A) Two firms cooperate and set the price that maximizes joint profits.
B) Each firm automatically moves to the purely competitive equilibrium because it knows the other firm will eventually move to that price anyway.
C) Given the prices chosen by its competitors, no firm has an incentive to change their prices from the equilibrium level.
D) One dominant firm sets the price, and the other firms take that price as if it were given by the market.