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- 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.) THE ANSWER IS NOT 2 or 1.75 Might be 1.25 or 4.50Branding Iron Products, a specialty steel fabricator, operates a plant in the town of West Star, Texas. The town has grown rapidly because of recent discoveries of oil and gas in the area. Many of the new residents have expressed concern at the amount of pollution (primarily particulate matter in the air and waste water in the town’s river) emitted by Branding Iron. Three proposals have been made to remedy the problem:a. Impose a tax on the amount of particulate matter and the amount of waste water emitted by the firm.b. Prohibit pollution by the firm.c. Offer tax incentives to the firm to clean up its production processes.Evaluate each of these alternatives from the perspectives of economic efficiency, equity, and the likely long-term impact on the firm.Suppose there are 1,000 potential customers spread evenly along a 10 kilometre straight road and each potential customer will buy one pizza per day from a monopolist provided that the price plus any disutility cost does not exceed $10, where disutility cost of travel is $1 for every kilometre. Each pizza costs $6 to make and there is a $70 overhead cost per day to operate the shop. What is the maximum profit per day? a. $1,130 b. $530 c. $930 d. $730 Clear my choice
- Regulations have an efficiency-enhancing role in the presence of exter-nalities. Discuss, with examples of regulatory approaches including theCoasian approach.The EPA’s requirement that cars include pollutioncontrol devices is an example of government deregulation.True_____ False_____Suppose that Penn Products and Teller Industries are both emitting 30 metric tons of perfluorocarbons (PFCs) into the atmosphere. Regulators wish to reduce emissions to 40 metric tons overall, and plan to achieve this with a system of tradable permits. Penn’s marginal abatement costs are given by MACP = 5eP, where eP is the number of metric tons of emissions that Penn is cutting. Thus, the cost of cleaning up the first metric ton is $5, the second ton costs $10 to clean up, and so on. Teller’s marginal abatement costs are given by MACT = 7.5eT, where eT is the number of metric tons of emissions that Teller cuts. a. The lowest-cost way to reduce emissions is found when both firms’ marginal abatement costs are equalized. Equate Penn’s and Teller’s marginal abatement costs, and solve for eP in terms of eT. For each metric ton that Teller cuts, how many tons should Penn cut? b. Because 20 metric tons are to be cut, we know that eP + eT = 20. Use your…
- An industry produces its product, Scruffs, at a constant marginal cost of $50. The market demand for Scruffs is equal to Q = 75000 - 600P a. What is the value to a monopolist who is able to develop a patented process for producing Scruffs at a cost of only $45? b. If the industry producing Scruffs is purely competitive, what is the maximum benefit that an inventor of a process that will reduce the cost of producing Scruffs by $5 per unit can expect to receive by licensing her invention to the firms in the industry?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?Suppose that a firm's marginal abatement cost function with existing technologies is MAC = 18 - 2E. If the firm adopts new pollution abatement technologies, then its marginal abatement cost function will become MAC = 9 - E. With an emissions tax of $4, the benefits of adopting the new technologies are $____. (Hint: recall that the benefits of adopting new technologies is simply the difference in total compliance costs.) Please round your final answer to two decimal places if necessary. Answer: ? Not 5
- What is the Legal Charges? What is the Violations of EPA Clean Water Act? How is the Legal Charge and the violation of EPA Clean Water Act that relate to the deepwater horizon of BP oil?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?Q-3: A monopolist sells in 2 markets and produces in 1 factory. Although the monopolist can charge difference prices in the two markets, it must sell all units within a market at the same price.a) Suppose this monopolist does not have a marginal cost (M C = 0). If demand in market 1 is X1(p1) = a1 −b1p1 and demand in market 2 is X2(p2) = a2 −b2p2, set up the monopolist’s profit maximization problems and solve for the market prices that result in each market.b) Under what conditions on a1, b1, a2, b2 from above will the monopolist not price discriminate?c) If demand in market i, where i = 1 , 2, is instead Xi(pi) = aipi−bi and the monopolist has some constant marginal cost of c, where c > 0, set up the monopolist’s profit maximization problem and solve for the market prices.d) Under what conditions on a1, b1, a2, b2 from above will the monopolist not price discriminate?