4. Open Access/Tragedy of the Commons: Suppose that an underground aquifer can be accessed by a number of different wells drilled from the surface. Wells cost $30 per day to run; water is worth $1 per gallon. What is the efficient number of wells? The open access number of wells? Output of Well Water (gals/day) Average # of Water Wells Total Marginal 0. 1 40 80 3. 115 4. 145 170 6. 190 7 205 8. 215

4. Open Access/Tragedy of the Commons: Suppose that an underground aquifer can be accessed by a number of different wells drilled from the surface. Wells cost $30 per day to run; water is worth $1 per gallon. What is the efficient number of wells? The open access number of wells? Output of Well Water (gals/day) Average # of Water Wells Total Marginal 0. 1 40 80 3. 115 4. 145 170 6. 190 7 205 8. 215

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter17: Externalities And The Environment

Section: Chapter Questions

Problem 2.6P: (External Costs with Variable Technology) Think of an industry that pollutes the water and has...

See similar textbooks

Similar questions

Name two public goods and explain why they are public goods.
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?
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.
An emissions tax on a quantity of emissions from a film is not a command-and-control approach to reducing pollution. Why?
In a market without environmental regulations, will the supply curve for a film account for private costs, external costs, both, or neither? Explain.
Education provides both private benefits to those who receive it and broader social benefits for the economy as a whole. Think about the types of policies a government can follow to address the issue of positive spillovers in technology and then suggest a parallel set of policies that governments could follow for addressing positive externalities in education.
What are the two key characteristics of public goods?
Assume that the marginal private costs of a film producing fuel-efficient can; is greater than the marginal social costs. Assume that the marginal private benefits of a firm producing fuel efficient cars are the same as the marginal social benefits. Discuss one wags.r that the government cans ï¬‚y to increase production and sales of fuel efficient cars to the socially desirable amount. Hint: the government is flying to affect production through costs, net benefits.
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?
Suppose that Sonys R. Is this a private or social benefit?