Complete the following table with the action each firm will take at this permit price, the amount of pollution each firm will eliminate, and the amount it costs each firm to reduce pollution to the necessary level. If a firm is willing to buy two permits, assume that it buys one permit from each of the other firms. (Hint: Do not include the prices paid for permits in the cost of reducing pollution.) Firm Firm A Firm B Firm C Initial Pollution Permit Allocation (Units of pollution) 2 2 2 Action Final Amount of Pollution Eliminated (Units of pollution) Cost of Pollution Reduction (Dollars)
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- Suppose a municipality votes to reduce the combined pollution introduced by three local companies. Presently, each firm creates 4 units of pollution in the area, for a total of 12 pollution units. The government can reduce total pollution in the area to 6 units by choosing between the following two methods:Methods to Reduce Pollution1. The government imposes pollution standards using regulation.2. The government issues tradable pollution permits.The costs faced by each firm are different, so it is more difficult for some firms to reduce pollution than others. The following table shows the cost faced by each firm to eliminate each unit of pollution. Assume that the cost of eliminating all 4 units of pollution (that is, reducing pollution to zero) is prohibitively expensive for all three firms.FirmCost of Eliminating the...First Unit of PollutionSecond Unit of PollutionThird Unit of Pollution(Dollars)(Dollars)(Dollars)Firm A 130 165 220Firm B 600 750 1,200Firm C…Answer all parts please i have to submit this last question soon please 3. Correcting for negative externalities - Regulation versus tradablepermits Suppose the government wants to reduce the total pollution emitted by three local firms. Currently, each firm is creating 4 units of pollution in the area, for a total of 12 pollution units. If the government wants to reduce total pollution in the area to 6 units, it can choose between the following two methods: Available Methods to Reduce Pollution 1. The government sets pollution standards using regulation. 2. The government allocates tradable pollution permits. Each firm faces different costs, so reducing pollution is more difficult for some firms than others. The following table shows the cost each firm faces to eliminate each unit of pollution. For each firm, assume that the cost of reducing pollution to zero (that is, eliminating all 4 units of pollution) is prohibitively expensive. Firm Cost of…Suppose the government wants to reduce the total pollution emitted by three local firms. Currently, each firm is creating 4 units of pollution in the area, for a total of 12 pollution units. If the government wants to reduce total pollution in the area to 6 units, it can choose between the following two methods: Available Methods to Reduce Pollution 1. The government sets pollution standards using regulation. 2. The government allocates tradable pollution permits. Each firm faces different costs, so reducing pollution is more difficult for some firms than others. The following table shows the cost each firm faces to eliminate each unit of pollution. For each firm, assume that the cost of reducing pollution to zero (that is, eliminating all 4 units of pollution) is prohibitively expensive. Firm Cost of Eliminating the... First Unit of Pollution Second Unit of Pollution Third Unit of Pollution (Dollars) (Dollars) (Dollars) Firm X 130 165 220…
- Suppose a municipality votes to reduce the combined pollution introduced by three local companies. Presently, each firm creates 4 units of pollution in the area, for a total of 12 pollution units. The government can reduce total pollution in the area to 6 units by choosing between the following two methods: Methods to Reduce Pollution 1. The government imposes pollution standards using regulation. 2. The government issues tradable pollution permits. The costs faced by each firm are different, so it is more difficult for some firms to reduce pollution than others. The following table shows the cost faced by each firm to eliminate each unit of pollution. Assume that the cost of eliminating all 4 units of pollution (that is, reducing pollution to zero) is prohibitively expensive for all three firms. Firm Cost of Eliminating the... First Unit of Pollution Second Unit of Pollution Third Unit of Pollution (Dollars) (Dollars) (Dollars) Firm…please answer all. 5. Correcting for negative externalities - Regulation versus tradablepermits Suppose the government wants to reduce the total pollution emitted by three local firms. Currently, each firm is creating 4 units of pollution in the area, for a total of 12 pollution units. If the government wants to reduce total pollution in the area to 6 units, it can choose between the following two methods: Available Methods to Reduce Pollution 1. The government sets pollution standards using regulation. 2. The government allocates tradable pollution permits. Each firm faces different costs, so reducing pollution is more difficult for some firms than others. The following table shows the cost each firm faces to eliminate each unit of pollution. For each firm, assume that the cost of reducing pollution to zero (that is, eliminating all 4 units of pollution) is prohibitively expensive. Firm Cost of Eliminating the... First Unit of Pollution Second Unit…Q. 3 in a small town, a paper mill discharges wastewater to the river, causing water pollution. suppose MD=3E and MAC= 40-2E. calculate the following and illustrate your answers with graphing: a) socially efficient level of emissions? what is total social cost related to this level of emission? b) consider a liability law requiring the polluter to compensate for all the damages caused. what is the polluter's optimal choice of emission level? what is total compliance cost at this level? c) consider an Emission standard set at the efficient level. what is polluters total compliance cost at this level? d) consider an emission tax policy. what is the optimal tax rate to achieve the efficienct emission level? what is polluter's total compliance cost at this level? e) consider an abatement subsidy policy. what is the optimal subsidy rate to achieve the efficienct emission level; what is polluters net receipt at this level?
- Two firms are ordered by the federal government to reduce their pollution levels. Firm A’s marginal costs associated with pollution reduction are MC = 150 + 3Q. Firm B’s marginal costs associated with pollution reduction is MC = 9Q. The marginal benefit of pollution reduction is MB = 250-4Q. A.What is the socially optimal level of each firm’s pollution reduction? B. Compare the social efficiency of three possible outcomes: Require all firms to reduce pollution by the same amount (half of the total calculated in part a); Charge a common tax per unit of pollution; Require all firms to reduce pollution by the same amount, but allow pollution permits to be bought and soldFirms A and B each produce 80 units of pollution. The federal government wants to reduce pollution levels. The marginal costs associated with pollution reduction are MCA = 50 + 3QA for firm A and MCB = 20 + 6QB for firm B, where QA and QB are the quantities of pollution reduced by each firm. Society’s marginal benefit from pollution reduction is given by MB = 590 – 3Qtot, where Qtot is the total reduction in pollution. How much total pollution is there in the social optimum?What is an externality in economics? Explain how a neighbor’s barking dog could be both a positive and a negative externality. Can pollution ever make us better off? How do we know? Should we aim to eliminate all pollution? If not, what should our goal be? Defend your answer. When thinking about types of goods, what does rivalry mean? What does excludability mean? What are the four categories of goods we can identify using those attributes, and what is an example of a good in each category?
- Firms A and B each produce 80 units of pollution. The federal government wants to reduce pollution levels. The marginal costs associated with pollution reduction are MCA = 50 + 3QA for firm A and MCB = 20 + 6QB for firm B, where QA and QB are the quantities of pollution reduced by each firm. Society’s marginal benefit from pollution reduction is given by MB = 590 – 3Qtot, where Qtot is the total reduction in pollution. What is the socially optimal level of each firm’s pollution reduction?Suppose the government initially allocates the permits evenly, so that before trading begins each firm needed to reduce 60 tons of pollution each (120 tons total). How many tons of pollution will each firm reduce after permit trading (i.e. what is Q1and Q2)? Q1=__ ; Q2=___Suppose the total benefit and total cost to society of various levels of pollution abatement are as follows: Complete column (4). (Enter your responses as integers.) (1) Pollution Abatement (2) Total Benefit (3) Total Cost (4) Total Net Benefit (5) Marginal Benefit (6) Marginal Cost 0 0 0 nothing — — 1 22 9 nothing 2 42 20 nothing 3 60 33 nothing 4 76 48 nothing 5 90 65 nothing 6 102 84 nothing (1) Pollution Abatement (2) Total Benefit (3) Total Cost (4) Total Net Benefit (5) Marginal Benefit (6) Marginal Cost 0 0 0 — — 1 22 9 13 2 42 20 22 3 60 33 27 4 76 48 28 5 90 65 25 6 102 84 18 Using optimization in levels, if the U.S. Environmental Protection Agency (EPA) wants to…