3. The EPA wants to reduce emissions of sulfur dioxides from electric power-generating plants by 20 percent during the next year. To achieve this goal, the EPA will require each power-generating plant in the nation to reduce emissions by 100 tons per year. Suppose five power plants emit sulfur dioxides and serve a given metropolitan area. The following table shows the cost per ton of reducing emissions for each of the five plants: COST PER TON OF PLANT 1 2 3 4 5 EMISSIONS REDUCTION ($) a. Cost of meeting EPA regulations. 600 500 500 400 200 Assuming that the cost per ton of emissions reduction is constant and that the improvement in the air for the metropolitan area is the same no matter which plant reduces emissions, calculate the following: b. Least-cost method of achieving the EPA goal of reducing emissions of sulfur dioxides from power plants in the metropolitan area.

3. The EPA wants to reduce emissions of sulfur dioxides from electric power-generating plants by 20 percent during the next year. To achieve this goal, the EPA will require each power-generating plant in the nation to reduce emissions by 100 tons per year. Suppose five power plants emit sulfur dioxides and serve a given metropolitan area. The following table shows the cost per ton of reducing emissions for each of the five plants: COST PER TON OF PLANT 1 2 3 4 5 EMISSIONS REDUCTION ($) a. Cost of meeting EPA regulations. 600 500 500 400 200 Assuming that the cost per ton of emissions reduction is constant and that the improvement in the air for the metropolitan area is the same no matter which plant reduces emissions, calculate the following: b. Least-cost method of achieving the EPA goal of reducing emissions of sulfur dioxides from power plants in the metropolitan area.

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 43P: A city currently emits 15 million gallons (MG) of raw sewage into a lake that is beside the city....

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A city currently emits 15 million gallons (MG) of raw sewage into a lake that is beside the city. Table 12.13 shows the total costs (TC) in thousands of dollars of cleaning up the sewage to different levels, together with the total benefits (TB) of doing so. Benefits include environmental, recreational, health, and industrial benefits. Using the information in Table 12.13 calculate the marginal costs and marginal benefits of reducing sewage emissions for this City. What is the optimal level of sewage for this city? How can you tell?
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Suppose a city releases 16 million gallons of raw sewage into a nearby lake. Table 12.8 shows the total costs of cleaning up the sewage to different levels, together with the total benefits of doing so. (Benefits include environmental, recreational, health, and industrial benefits.) Using the information in Table 12.8, calculate the marginal costs and marginal benefits of reducing sewage emissions for this city. See Production, Costs and Industry Structure if you need a refresher on how to calculate marginal costs. What is the optimal level of sewage for this city? Why not just pass a law that films can emit zero sewage? After all, the total benefits of zero emissions exceed the total costs.
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