Appalachian Coal Mining believes that it can increase labor productivity and, therefore, net revenue by reducing air pollution in its mines. It estimates that the marginal cost function for reducing pollution by installing additional capital equipment is MC = 40P where P represents a reduction of one unit of pollution in the mines. It also feels that for every unit of pollution reduction, the marginal increase in revenue (MR) is MR = 1,000 - 10P How much pollution reduction should Appalachian Coal Mining undertake?

Appalachian Coal Mining believes that it can increase labor productivity and, therefore, net revenue by reducing air pollution in its mines. It estimates that the marginal cost function for reducing pollution by installing additional capital equipment is MC = 40P where P represents a reduction of one unit of pollution in the mines. It also feels that for every unit of pollution reduction, the marginal increase in revenue (MR) is MR = 1,000 - 10P How much pollution reduction should Appalachian Coal Mining undertake?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter3: Demand Analysis

Section: Chapter Questions

Problem 2.2CE

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. Appalachian Coal Mining believes that it can increase labor productivity and, therefore, net revenue by reducing air pollution in its mines. It estimates that the marginal cost function for reducing pollution by installing additional capital equipment is MC=40P Where P represents a reduction of one unit of pollution in the mines. It also feels that for every unit of pollution reduction the marginal increase in revenue (MR) is MR=1000-10P How much pollution reduction should Appalachian Coal Mining undertake?
Appalachian Coal Mining believes that it can increase labor productivity and, therefore, net revenue by reducing air pollution in its mines. It estimates that the marginal cost function for reducing pollution by installing additional capital equipment is MC = 40P where P represents a reduction of one unit of pollution in the mines. It also feels that for every unit of pollution reduction, the marginal increase in revenue (MR) is MR = 1,000 - 10P How much pollution reduction should Appalachian Coal Mining undertake? Please provide the correct answer. Thank you!
The marginal benefit of being able to emit a ton of sulfur dioxide emissions for two firms are given by:MBX = 1000 – ( Ex / 2 )MBY = 600 – ( Ey / 3 ) Note that these marginal benefit figures can be interpreted as marginal cost of abating emission down to levels Ex and Ey.Government regulators want to reduce total sulfur dioxide emissions to a total of 1800 tons.a) If the government imposes the same standard of 900 tons maximum emissions on both firms what would be the total cost of abatement (calculated as the aggregated marginal benefits forgone)? b) If the government distributed 900 tradable pollution permits (one ton each) to each firm what would be the final allocation of these permits after the firms trade them?c) What would be the total cost of abatement in this latter case?
The cost of reducing lead contamination of water for BigManufacture Inc. is shown in the table below. BigManufacture Inc currently releases lead in to the local waterways at a concentration of 5 parts per billion. The government regulations sets a limit to the lead pollution at 2 parts per billion accompanied by a $30,000 fine per year for each part per billion beyond the 2 part limit. What is BigManufacture Inc likely to do? Reduction of Lead Cost By 1 part per billion $20,000/year By 2 parts per billion $45,000/year By 3 parts per billion $80,000/year Group of answer choices Reduce lead pollution by 1 part per billion. Reduce lead pollution by 2 parts per billion. Reduce lead pollution by 0 part per billion. Reduce lead pollution by 3 parts per billion.
Suppose that under the United States-Canada Air Quality Agreement, both countries agree to a combined 30 percent SO2 abatement standard. Further assume that the following SO2 abatement cost functions have been estimated by each country: TACUS = 500 + 1.5(AUS)2 MACUS = 3 AUS TACCAN = 1000 + 3(ACAN)2 MACCAN = 6 ACAN A. If the countries implement a uniform abatement standard, find the resulting values of TAC and MAC for each nation. Based on these values, is there an economic incentive the two nations to participate in an emissions trading program? Explain. B. Assuming a trading program is enacted, find the cost savings associated with a cost-effective abatement solution? C. What must be the price of a tradeable permit to achieve the cost-effective abatement allocation?
Respond to the question with a concise and accurate answer, along with a clear explanation and step-by-step solution, or risk receiving a downvote. n the table below are the marginal abatement costs of two firms. Note that an entry in the table indicates the cost of reducing emissions by one unit from the previous level. For example, $104 is the additional abatement cost for Firm 1 to reduce its emissions from 3 tons to 2 tons, and $40 is the cost for Firm 2 to reduce its emissions from 7 tons to 6 tons. 1.In an unregulated environment each firm produces 10 tons of emissions (20 tons total). Using the table above, what emissions levels (i.e., emissions standards) would you assign if you wanted to limit aggregate emissions to 7 tons in a cost-effective manner? Firm 1’s emissions level ________________ Firm 2’s emissions level ________________ 2.Given the emissions levels from Question 1, calculate the total abatement cost for each firm? Firm 1’s total abatement cost ________________…
Suppose that a firm's marginal abatement cost function with existing technologies is MAC = 8 - E. If the firm adopts new pollution abatement technologies, then its marginal abatement cost function will become MAC = 4 - 0.5E. Moreover, assume that the adoption costs for the new technologies are $3. If the government raises the tax on emissions from $1 to $3, then the firm's total costs increase by $____. (Hint: total costs are different from total compliance costs. Total compliance costs are the sum of TAC and tax payment, while total costs are the sum of total compliance costs and adoption costs (remember that adoption costs are only incurred if the firm actually decides to adopt the new technology).) Please round your final answer to two decimal places if necessary. THE ANSWER IS NOT 9
Consider an industry with two firms that emit a uniformly mixed air pollutant (e.g., carbon dioxide). The marginal abatement cost functions for Firm 1 and Firm 2 are: MAC1 = 100-e1 MAC2 = 100-4e2 Aggregate emissions for the industry are denoted as E = e1 + e2. [1] In an unregulated environment how many units of emissions does each firm emit? Firm 1’s unregulated level of emissions: Firm 2’s unregulated level of emissions: Total unregulated level of emissions: Suppose a regulator has a goal of reducing the total level of emissions from the amount from the amount you answered in [1] to 25 units. The regulator would like to achieve the goal of 25 units of total emissions in a cost-effective way. To do so it issues 25 permits, 10 are given to Firm 1 and 15 are given to Firm 2. A firm can only emit a unit of pollution if they have a permit for that unit, otherwise they must abate. After the permits are allocated, firms are allowed to buy or sell…
Consider an industry with two firms that emit a uniformly mixed air pollutant (e.g., carbon dioxide). The marginal abatement cost functions for Firm 1 and Firm 2 are: MAC1 = 100 - e1 MAC2 = 100 - 4e2 Aggregate emissions for the industry are denoted as E = e1 + e2. [1] In an unregulated environment how many units of emissions does each firm emit? Firm 1’s unregulated level of emissions ____________ Firm 2’s unregulated level of emissions ____________ Total unregulated level of emissions ______________
Suppose there are 100 farmers each with 10 acres that overlie a common groundwater aquifer. They all have identical farmland that is more productive if wells are used to pump the groundwater for irrigation. They all face a marginal cost of $10 per well. The average productivity (in $ of crop output) of the wells of the common aquifer is given by AP = 100 – W where W is the number of wells drilled into the aquifer. 1a. Assume farmers act on their own how many wells will be drilled and how much rent will the aquifer generate. A. 45; 2025 B. 90; 2025 C. 60; 1000 D. 90; 0 E. 45; 0 F. None of the above
Suppose the aggregate MAC function is 100 - 20W and aggregate MD = 5W for a polluting industry. 1. Here the slopes of MAC and MD are equal in absolute value. Suppose instead that the slope of the MD function is greater than the slope of the MAC function. What would then be the preferred policy if there was asymmetric information about MAC? A. Emissions tax B. Emissions standard C. No regulation D. None of the above 2. Suppose an emissions standard is being considered to achieve the socially optimal emissions level. What would be the total costs that the polluting industry avoids if the regulator decided not to regulate the firm and leave the market as is? A. 0 B. 150 C. 50 D. 10 3. What are total damages that would be avoided if in fact the regulator used an emissions standard to achieve the socially optimal level of emissions? A. 62.5 B. 40 C. 12.5 D. None of the above 4. What are net benefits at the optimal level of emissions using the "abatement cost perspective'' ?…
Suppose that a firm's marginal abatement cost function with existing technologies is MAC = 16 - 2E. If the firm adopts new pollution abatement technologies, then its marginal abatement cost function will become MAC = 8 - E. If the government raises the emissions tax from $2 to $3, then the benefits of adopting the new technologies increase by $____. (Hint: recall that the benefits from adopting new technologies are simply the difference in total compliance costs.) Please round your final answer to two decimal places if necessary. Answer is NOT 2. All information is provided