A ng.cengage.com/static/nb/ui/evo/index.html?deploymentld%3598281247957E1GmailE eAccount Quick Car..B Calendar | NavigateMain Street Comm.劉 Ta«CENGAGE MINDTAPHomework (Ch 10)Back to AssignmentAtemptsKeep the Highest/3Tools7. Correcting for negative externalities - Taxes versus tradablepermitsPower stations emit sultur dioxide as a waste product. This generates a cost to society that is not paid for by the firm; therefore, pollution is apsnegative externality of power production. Suppose the u.S. government wants to correct this market failure by getting firms to internalize the cost ofpollution. To da this, the government can charge firms for pollution rights (the right ta emit a given quandity of sulfur dioxide). The following graphpsshows the daly demand for polution rights.Lise the graph input tool to hel you answer the fallowing questions. You wit not be praded on any changes you make to this graph.Note: Once you enter a value in a white feld, the graph and any coresponding amounts in each grey field will change accordingly.akingGraph Input ToolDaily Dernand for Polution RightsPrice(Delarsper tan)12QuantityDemandedTMons of tan3155427bemand25N s 140 17s a0 245 2ac s 0QUANTITY Mons of sons)Suppose the govemment has determined that the socaly optimal quantity of sultur diaxide emissions is 245 milion tons per day.One way govermments can charge firms for poltion rights is by imposing a per unit tax on emissions. A tax for price in this case) of per tonof sulfur dicide emitted will achieve the desired level of pollution.Now suppose the U.S. government does not know the demand curve for pollution and, therefore, cannot determine the optimal tax to achieve thedesired level of pollution. Instead, it auctions off tradable potution permits. Each permit entities its owner to emit one ton of sufur dexide per day. Toachieve the socially optimal quantity of polution, the government auctions off 24S million polution permits. Given this quantity of permts, the pricefor each permit in the market for polution rights will besThe previous analysis hinges on the government having good information regarding ether the demand for polution permits or the optimal level ofpolution (or bath). Given that the approprate policy (tradatie permits or comective taxes) can depend on the avalable infomatian and the policygoal, consider the folowing sconarioAn environmental study conducted in a particular city suggests that if a chemical plart emits more than 90 milion tons of chemicalseach year, the water suppy will become contaminated beyond the point where naration techniques can make it sate for drinkingar this is al the information the government has, which solution to reduce poluton is appropriate? Check al that applyO Comective taxesO tradable peritsGrade NowSave & ContinueCorsnue withol savingad seonia

A per-unit tax on emissions is one way the government can charge businesses for pollution rights.…

7. Correcting for negative externalities - Taxes versus tradablepermits Power stations emit sutur diovide as a waste product. This generates a cost ta society that is not paid for by the firm, therefore, pollution is a eegative externality of power production. Suppose the US. government wants to correct this market failure by getting ferms to internalize the cost of pollution. To da this, the government can charge firms for pollution rights (the right ta emit a given quansity of suitur diovide). The foliowing graph shows the daly demand for pollution rights. Use the graph inaut tool to help you answer the fallowing questions You wif eot be praded on any changes you make to this graph Note Once you enter a value in a white feld, the graph and any conresponding amounts ie each grey feld wil change accordingly Graph Input Tool Daily Dermand for Polution Rights Quantity Demanded 315 Demand NN s as an a s o QUANTITY ons ofon Suppose the govemment has detarmined that the socialy optmal quantity of sultur diaxide emissions is 245 ilion tons per day One way govemments can charge firms for poltion rights is by imposing a perunit tax an emissions. A tax for price is this case) of per ton of ufur dexide emited will achieve the desired level of pollution Now uppese the US. government does nat know the demand curve for pollution and, therefore, cannet determne the optimal tax ta achieve the desired evel of pulution. Enstead, it auctions of tradable potutien permits. Each permit entities ts wner to emit one ton of sutur dexide per day. To acheve the sacally optimal quancty of polution, the govemment auctions off 24S ition pollution permits. Given this quantity of perms, the prtce for each permtin the market for polution rights will be The previous analys hinges on the government having good information regarding ether the demand for polun permts ar the optimal level of pollution (or batn) Given that the approprate poicy (tradatie permits or comective taes) can depand on the available infomation and the policy goal, consider he tutowing sconano Ae environmental tudy conducted ina partcular city sggests thatia chemical plant eits more than 0 mion tons of chemicals each year, the water supply wil became contaminated beyond the point where aration techniques can make it sate fr drining thss all the information the governmant ha, whih slution to reduce poluon is appropriate? Check at hat apply O Comective tass O tade permts