750 permits b. How many pollutants should be cleaned up every year? 250 units c. Assume that there are 2 coal power plants, and that the marginal benefit of abatement and the marginal costs are as followed:

750 permits b. How many pollutants should be cleaned up every year? 250 units c. Assume that there are 2 coal power plants, and that the marginal benefit of abatement and the marginal costs are as followed:

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 5SCQ: Consider two approaches to reducing emissions of CO2 into the environment from manufacturing...

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Question

Show me the step for the given answers...

3. Country X has carbon emission of 1000 units per
year. The country is involved with Paris Agreement
and will strive to reduce the emission of pollutants
by 25%. The country has decided that the
appropriate strategy is a permit system. (These
problems are all sequential)
a. How many permits should the government
provide?
750 permits
b. How many pollutants should be cleaned up
every year?
250 units
c. Assume that there are 2 coal power plants, and
that the marginal benefit of abatement and the
marginal costs are as followed:
MBAbatement = 1000 – 1.75QAbatement
МСдbatement,A
= Qabatement,A
МСAbatement,B
3QAbatement,B
Find the number of pollutants that would be
abated by firm A and firm B!
Firm A -> 187.5 units , Firm B -> 62.5 units
d. Find the equilibrium price for the permit
187.5

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