I think I know where the efficient level of emissions is, I think it is is where the line for aggregate marginal
damage crosses the line for aggregate marginal abatement cost plus marginal enforcement costs, but I’m not sure is thats entirely correct. I’m not really sure why the efficient emissions tax is lower and I’m a little confused on how to figure that out. If anyone could help explain these two questions just a little, I would be very grateful. Thank you!
Aggregate Marginal Abatement Cost
plus Marginal Enforcement Costs
(6.1) In the graph identify the efficient emissions tax and the efficient level of emissions.
(6.2) Explain why the efficient emissions tax is lower than the value that equates Aggregate
Marginal Damage to Aggregate Marginal Abatement Cost plus Marginal Enforcement Costs.