3. generates pollution. The annual demand for muclear energy is given by QD - 300 - 2P. The annual market supply is given by QS - P. In both equations, P is the price in dollars per unit. For every unit of output produced, the industry emits of one units of pollution. The marginal damage from each unit of pollution is given by Q. Consider a production of nuclear energy whose production process a) Find the equilibrium price and quantity in a market with no govemment intervention. b) Find the socially optimal quantity of the muclear energy. What is the socially optimal market price? c) Suppose an emissions fee is imposed on producers. What emissions fee would induce the socially optimal quantity of the gossip

3. generates pollution. The annual demand for muclear energy is given by QD - 300 - 2P. The annual market supply is given by QS - P. In both equations, P is the price in dollars per unit. For every unit of output produced, the industry emits of one units of pollution. The marginal damage from each unit of pollution is given by Q. Consider a production of nuclear energy whose production process a) Find the equilibrium price and quantity in a market with no govemment intervention. b) Find the socially optimal quantity of the muclear energy. What is the socially optimal market price? c) Suppose an emissions fee is imposed on producers. What emissions fee would induce the socially optimal quantity of the gossip

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter12: Environmental Protection And Negative Externalities

Section: Chapter Questions

Problem 42P: Table 12.12, shows the supply and demand conditions for a firm that will play trumpets on the...

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Similar questions

What is a pollution charge and what incentive does it provide for a firm to take external costs into account?
Refer to Table 12.2. The externality created by the refrigerator production was 100. However, once we accounted for both the private and additional external costs, the market price increased by only 50. If the external costs were 100 why did the price only increase by 50 when we accounted for all costs?
Consider the case of global environmental problems that spill across international borders as a prisoners dilemma of the sort studied in Monopolistic Competition and Oligopoly. Say that there are two countries, A and B. Each country can cheese whether to protect the environment, at a cost of 10, or not to protect it, at a cost of zero. If one country decides to protect the environment, there is a benefit of 16, but the benefit is divided equally between the two countries. If both countries decide to protect the environment, there is a benefit of 32, which is divided equally between the two centuries. In Table 12.10, fill in the costs, benefits, and total payoffs to the countries of the following decisions. Explain why, without some international agreement, they are likely to end up with neither country acting to protect the environment.
What is a marketable permit and what incentive does it provide for a firm to account for external costs?
In a market without environmental regulations, will the supply curve for a film account for private costs, external costs, both, or neither? Explain.
Suppose you want to put a dollar value on the external costs of carbon emissions from a power plant. What information or data would you obtain to measure the external [not social] cost?
Consider two approaches to reducing emissions of CO2 into the environment from manufacturing industries in the United States. In the first approach, the U.S. government makes it a policy to use only predetermined technologies. In the second approach, the U.S. government determines which technologies are cleaner and subsidizes their use. Of the two approaches, which is the command-and-control policy?
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A country called Sherwood is very heavily covered with a forest of 50,000 trees. There are proposals to clear some of Sherwoods forest and grow com, but obtaining this additional economic output will have an environmental cost from reducing the number of trees. Table 12.11 shows possible combinations of economic output and environmental protection. Sketch a graph of a production possibility frontier with environmental quality on the horizontal axis, measured by the number of trees, and the quantity of economic output, measured in corn, on the vertical axis. Which choices display productive efficiency? How can you tell? Which choices show allocative efficiency? How can you tell? In the choice between T and R, decide which one is better. Why? In the choice between T and S, can you say which one is better, and why? If you had to guess, which choice would you think is more likely to represent a command-and-control environmental policy and which choice is more likely to represent a market-oriented environmental policy, choice Q or S? Why?
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Table 12.12, shows the supply and demand conditions for a firm that will play trumpets on the streets when requested. QS1 is the quantity supplied without social costs. QS2 is the quantity supplied with social costs. What is the negative externality in this situation? Identify the equilibrium price and quantity when we account only for private costs, and then when we account for social costs. How does accounting for the externality affect the equilibrium price and quantity?
As the extent of environmental protection expands, would you expect the marginal benefits of environmental protection to rise or fall? Why or why not?